RTTNews - After finishing higher in consecutive sessions and in four of the last five trading days, the Malaysian stock market turned back to the downside again on Tuesday. The Kuala Lumpur Composite Index is clinging to support at the 1,050-point plateau, although investors are optimistic that the market will build on its totals and move back to the upside on Wednesday.
The global forecast for the Asian markets is cautiously optimistic, although the positive sentiment could be damaged by the test-firing of another missile on Wednesday morning by North Korea. The markets get a boost from better than expected economic data out of the United States, and retailers also are forecast to trade higher. The European markets finished mostly higher and the U.S. markets ended sharply higher - and the Asian bourses are also tipped to trade in the green.
The KLCI finished barely lower on Tuesday, as modest losses among the plantations and slight declines among the industrials were largely offset by gains among the financial sector.
For the day, the index eased 1.51 points or 0.14 percent to close at 1,051.63 after trading between 1,048.93 and 1,057.42. Volume was 1.593 billion shares worth 1.516 billion ringgit. There were 409 decliners and 268 gainers, with 203 stocks finishing unchanged.
Among the decliners, Bumiputra-Commerce, IOI Corp, KL Kepong, Batu Kawan, Sime Darby, Genting, Tenaga Nasional, TA Warrants, KNM, SAAG, Mulpha and Scomi all finished lower. Bucking the trend, Zelan, Maybank and MISC ended in the green.
The lead from Wall Street is broadly positive as stocks staged a substantial rally over the course of the trading day on Tuesday after seeing some initial weakness, snapping a four-day losing streak. The major averages finished near their best levels of the day, bolstered by some positive news on the health of the U.S. consumer.
The Conference Board's reading on consumer confidence for May improved by far more than expected, reaching its highest level since September. The data generated some optimism about the outlook for consumer spending, which accounts for nearly two-thirds of economic activity. The consumer confidence figure helped to bolster some of the day's risk appetite, as reflected by the surge in equities following the release of the report.
Earlier in the day, disappointing housing price data contributed to the initial weakness. Traders largely shrugged off the data, however, citing the lagging nature of the numbers and choosing to focus on the encouraging consumer confidence data.
Retail stocks enjoyed a considerable run-up on the day, benefiting from the better than expected consumer confidence data. The S&P Retail Index closed up 4 percent, although it remains well off the seven-month highs that it set earlier this month.
The major averages moved roughly sideways in the second half of the day, holding onto strong gains. The Dow closed up 196.17 points or 2.4 percent at 8,473.49, the Nasdaq rose 58.42 points or 3.5 percent to 1,750.43 and the S&P 500 closed up 23.33 points or 2.6 percent at 910.33.
In economic news, Malaysia will on Wednesday announce first quarter figures for gross domestic product, with forecasts predicting a contraction of 3.9 percent on year after the 0.1 percent gain in the previous three months.
Also, Malaysia's central bank left its overnight policy rate unchanged at 2 percent on Tuesday. The central bank retained the rate for the second straight meeting, while the decision was in line with economists' expectations. The last change in the interest rate was in February, when the central bank cut the rate by 50 basis points to 2 percent.
The bank said its current assessment is that the accumulated monetary policy initiatives and measures to enhance access to financing are sufficient to provide support to domestic demand.
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