The Malaysian stock market ended lower by less than 2 points on Tuesday, but that was enough to snap the eight-day winning streak in which it gained nearly 60 points or 6.5 percent along the way. The Kuala Lumpur Composite Index pulled away from resistance at 970 points, but analysts say the market likely will take another crack at that level in Wednesday's trade.
The global forecast for the Asian markets is fairly optimistic, despite some weaker than expected corporate earnings news. But the financials are expected to climb following positive comments from U.S. Treasury Secretary Timothy Geithner. The European markets were mixed and largely near the unchanged line, while the U.S. markets ended sharply higher - and the Asian markets are tipped to land somewhere in between.
The KLCI finished slightly lower on Tuesday, as profit taking nudged the market into negative territory. The financial stocks saw modest declines, while the industrial issues and plantations finished with just slight losses.
For the day, the index eased 1.77 points or 0.18 percent to close at 966.60 after trading between 958.99 and 966.60. Volume was 1.069 billion shares worth 959.849 million ringgit. There were 306 decliners and 251 gainers, with 191 stocks finishing unchanged.
Among the actives, Axiata added 2.6 percent, while Proton rose 4.4 percent, Tenaga lost 1.4 percent and Bursa eased 2.5 percent.
Wall Street offers a broadly positive lead as stocks showed a strong upward move over the course of the trading day on Tuesday, partly offsetting the steep losses posted in the previous session. While stocks saw initial weakness on disappointing earnings news, a positive reaction to comments from Geithner drove the markets higher.
The initial weakness came after Dow component Merck (MRK) reported first quarter earnings that fell short of analyst estimates and lowered its full year revenue guidance. Caterpillar (CAT) also slashed its full-year guidance, although it reported much better than expected adjusted first quarter earnings.
In other earnings news, chemical giant DuPont (DD) reported first quarter earnings that fell year-over-year and lowered its full-year guidance. The company's downwardly revised earnings guidance brought it in line with analyst estimates.
The turnaround by the markets was partly due to comments from Geithner, who assured the Congressional Oversight Panel that there is enough money left in the government's $700 billion financial rescue program to stabilize the financial system. Geithner said there is at least $134.4 billion in funds left. The Treasury Secretary also said that the vast majority of U.S. banks have enough capital and hinted that the credit markets may be thawing following their deep freeze.
Indicators on interbank lending, corporate issuance and credit spreads generally suggest improvements in confidence in the stability of the system and some thawing in credit markets, Geithner said.
The major averages moved to the upside going into the close, ending the session at or near their best levels of the day. The Dow closed up 127.83 points or 1.6 percent at 7,969.56, the NASDAQ closed up 35.64 points or 2.2 percent at 1,643.85 and the S&P 500 closed up 17.69 points or 2.1 percent at 850.08.
In economic news, Malaysia is on Wednesday scheduled to release March numbers for its consumer price index and foreign reserves numbers through April 15. Inflation is forecast to increase by 3.6 percent on year, slowing slightly from the 3.7 percent annual expansion in February. Foreign reserves are predicted at $88.59 billion, up from $87.82 billion in the previous week.
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