RTTNews - The Malaysian stock market has continued to hover around the 1,180-point plateau all week, since snapping last week the modest two-day losing streak in which it had shed a dozen points or 1.2 percent. The Kuala Lumpur Composite Index has alternated positive and negative finishes through the last five sessions, and that trend could continue with selling pressure at Friday's opening.
The global forecast for the Asian markets is cautious as many of the regional bourses are likely waiting on Friday's U.S. non-farm payroll data. Technology and steel stocks are expected to see some mild easing, along with the airlines and healthcare sectors. Modest support is predicted from retail stocks. European stocks finished slightly higher, while the U.S. markets ended firmly in the red - and the Asian markets are also projected to open lower.
The KLCI finished slightly higher on Thursday, thanks to solid gains among the financials and more modest gains in the plantation and industrial sectors.
For the day, the index added 4.48 points or 0.38 percent to close at the daily high of 1,183.97 after dipping as low as 1,178.93. Volume was 1.025 billion shares worth 1.541 billion ringgit. There were 524 gainers and 186 decliners, with 203 stocks finishing unchanged.
Among the gainers, KNM Group, SAAG, Equine Capital, Mulpha, Bumiputra-Commerce, PPB, Maybank, MISC, Tenaga Nasional and Axiata all finished higher. Bucking the trend, Sime Darby and British American Tobacco ended lower.
The lead from Wall Street is modestly negative as stocks surrendered early gains and posted moderate losses on Thursday, with traders doing some profit taking ahead of key employment data on tap for Friday. The major averages all finished in negative territory, further offsetting recent gains.
Initial upside in the equity markets came after a report from the Labor Department showed that first-time claims for unemployment benefits came in lower than expected in the week ended August 1, offsetting some of the recent concerns about the outlook for the labor market. The report showed that initial jobless claims fell to 550,000 from the previous week's revised figure of 588,000. Economists had been expecting jobless claims to edge down to 580,000 from the 584,000 originally reported for the previous week.
Nonetheless, buying interest waned not long after the open, and the major averages pulled back into negative territory. The downturn came as traders cashed in on recent gains ahead of Friday's monthly employment report.
On the earnings front, traders reacted to a mixed bag of quarterly results from Cisco Systems (CSCO), Sunoco (SUN), Comcast (CMCSA, CMCSK), News Corp. (NWS), DirecTV Group (DTV), among others, as earnings season winds to a close. During the earnings season, a majority of companies were able to beat bottom line estimates via cost cutting measures, but most fell short of revenue estimates as the recession dampened product and service demand in the calendar second quarter.
Traders also looked to a slew of monthly sales results from retailers such as Target (TGT), Walgreen Co. (WAG), BJ's Wholesale Club (BJ), JC Penney (JCP) and Saks (SKS).
The major average experienced choppy trading heading into the close, seeing little change after moving off of their worst levels of the day in mid-afternoon trading. The Dow closed down by 24.71 points or 0.3 percent at 9,256.26, the NASDAQ slipped by 19.89 points or 1 percent to 1,973.16, and the S&P 500 fell by 5.64 points or 0.6 percent to 997.08.
In economic news, Fitch Ratings on Thursday maintained the stable outlook on Malaysia's local banks' credit ratings, despite very weak macro economic indicators.
The firm said the probability of capital impairment for Malaysian banks still appeared fairly low, despite the extremely stressed macro economic conditions and the reasonably-stressed assumptions simulated by the agency. Fitch said this in the context of its report titled Stress Test on Malaysian Banks, where it attempts to simulate a fairly-stressed scenario for Malaysian banks.
The firm also noted that although banks' earnings were likely to be lower in 2009 and 2010 compared with 2008, they appeared adequate to fully absorb the credit costs associated with asset quality deterioration. This means their loss absorption capacity would likely remain adequate and financial strength largely intact, Fitch said.
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