The Malaysian stock market was up just a handful of points, but that was enough to extend its winning streak to five sessions and collecting nearly 45 points or 5 percent in the process. The Kuala Lumpur Composite Index remained above support at 950 points, and now investors are expecting little movement from the market on Thursday.
The global forecast for the Asian markets is mixed with a touch of upside, in spite of some contradictory economic and corporate data. A proposal from U.S. President Barack Obama to overhaul the tax system gave the markets a lift, helping Wall Street to finish in positive territory. The European bourses ended mostly weaker, and the Asian markets are expected to stay close to the unchanged line.
The KLCI finished barely higher on Wednesday, nudged into positive territory by modest gains in the financial sector. The plantation stocks also finished higher, while the industrial issues ended barely above the unchanged line.
For the day, the index added 2.97 points or 0.31 percent to close at 956.68 after trading between 946.72 and 961.18. Volume was 1.655 billion shares worth 1.39 billion ringgit. There were 439 gainers and 216 decliners, with 174 stocks finishing unchanged.
Among the actives, KNM, UEM Land, Maybank and Hong Leong Bank all finished higher, while Sime Darby and IOI Corporation were unchanged and Tenaga, Bumiputra-Commerce and Axiata Group ended lower.
The lead from Wall Street is optimistic as stocks moved sharply higher at the close of trading on Wednesday after showing a lack of direction throughout much of the session. The major averages all closed in positive territory after turning in a mixed performance for most of the day. The choppy trading seen for most of the day came as traders digested a slew of economic reports as well as earnings news from some big-name companies.
On the economic front, the Federal Reserve's Beige Book report showed that overall economic activity has contracted further or remained weak, although it said five of the twelve Fed districts noted a moderation in the pace of decline. The Beige Book, a compilation of anecdotal evidence on economic conditions in each of the twelve Fed districts, also noted that several districts saw signs that activity in some sectors was stabilizing at a low level.
Earlier in the day, the Labor Department said its consumer price index fell 0.1 percent in March following a 0.4 percent increase the month before. The decline came as a surprise to economists, who had expected prices to edge up 0.1 percent. Excluding food and energy prices, the core consumer price index rose 0.2 percent for the third consecutive month. Economists had been expecting a 0.1 percent increase in core prices.
Separately, the Fed's industrial production report showed that production fell 1.5 percent in March, while capacity utilization dropped to 69.3 percent. Economists expected industrial production to decline 0.9 percent in March, while capacity utilization was expected to come in at 69.6 percent.
In corporate news, semiconductor giant Intel (INTC) reported first quarter earnings of $0.11 per share on revenues of $7.1 billion. While the results were down year-over-year, they exceeded analyst estimates of earnings of $0.03 per share on revenues of $6.98 billion. However, Intel disappointed investors by saying that was not providing a revenue outlook for the second quarter at this time due to economic uncertainty and limited visibility. Subsequently, shares of the semiconductor giant closed down 2.4 percent.
Meanwhile, Procter & Gamble Co. (PG) announced an increase in its quarterly dividend to $0.44 per share from $0.40 per share on its common stock. The news drove the stock up 3.2 percent.
In other news, President Obama pledged to reform the tax system Wednesday, calling for a simpler tax system that is fair to the middle-class. Speaking on the day that income taxes are due, the president focused on middle class families facing difficult decisions in the recession, and pledged to restructure the tax system.
While the major averages all closed above the unchanged line, the tech-heavy NASDAQ underperformed the Dow and the S&P 500 by a wide margin. The NASDAQ ended the session up 1.08 points or 0.1 percent at 1,626.80, while the Dow jumped 109.44 points or 1.4 percent to 8,029.62 and the S&P 500 closed up 10.56 points or 1.3 percent at 852.06.
In economic news, the Malaysian economy is forecast to contract at a pace of 2.2 percent in 2009, faster than government's expectations, as exports decline, the Malaysian Institute of Economic Research said on Wednesday. The institute had earlier forecast 1.3 percent growth for 2009. The think-tank noted that if Malaysia's exports shrink severely in the year, the downturn could be even worse. Meanwhile, the institute cut its growth forecast for 2010 to 3.3 percent from 3.8 percent estimated earlier.
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