RTTNews - The Malaysian stock market saw an end to the modest two-day winning streak in which it had gathered 8 points or 0.7 percent in the process. The Kuala Lumpur Composite Index fell through support at the 1,170-point plateau, and now investors are bracing for more selling pressure when the market opens for business on Tuesday.
The global forecast for the Asian markets is broadly pessimistic as markets around the world plunged on fears that an economic recovery is not quite as close as many had believed. Resource stocks are expected to see continued pressure - particularly the steel, oil and gold stocks - while the financials and properties also are forecast to see heavy selling pressure. The European and U.S. markets were sharply lower, and the Asian markets are tipped to follow that lead.
The KLCI finished sharply lower on Monday, thanks to heavy losses among the financials and the plantations, while the industrials suffered more modest declines.
For the day, the index dropped 19.52 points or 1.64 percent to close at 1,169.05 after trading between 1,168.64 and 1,188.57, Volume was 1.023 billion shares worth 1.435 billion ringgit. There were 701 decliners and 93 gainers, with 111 stocks finishing unchanged.
Among the decliners, KNM Group, TA, MRCB, Axiata, UEM Land, AirAsia, Sime Darby, Maybank, Bumiputra-Commerce, Tenaga Nasional and IOI Corporation all finished with significant losses.
The lead from Wall Street is brutally negative as stocks saw a sharp pullback on Monday, with last week's disappointing data on the health of the consumer sparking a broad-based sell-off in equities. The major averages all finished substantially lower, as some speculated that the markets rose in spite of weak fundamentals.
Also deflating traders' mood was news that Lowe's (LOW) second quarter earnings and revenues fell short of estimates. The home improvement retailer also provided disappointing guidance.
Nonetheless, some of the pessimism was moderated by the release of a report from the Federal Reserve Bank of New York showing that conditions for New York manufacturers improved for the first time in well over a year in the month of August. The New York Fed said its general business conditions index rose to 12.1 in August from a negative 0.6 in July, with a positive reading indicating an expansion in the manufacturing sector. Economists had been expecting the index to increase more modestly to 3.0.
Stocks rose by a modest margin after the National Association of Home Builders released its report on homebuilder confidence in the month of August, showing that its homebuilder confidence index rose to its highest level in over a year. The report showed that the NAHB/Wells Fargo Housing Market Index rose to 18 in August from 17 in July. With the increase, which came in line with economist estimates, the index rose to its highest level since June of 2008.
The major averages remained stuck in the red going into the close, finishing near their worst levels of the day. The Dow closed down by 186.06 points or 2 percent at 9,135.34, the NASDAQ fell by 54.68 points or 2.8 percent to 1,930.84 and the S&P 500 slipped by 24.36 points, or 2.4 percent to 979.73.
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