The Malaysian stock market on Tuesday snapped the two-day losing streak that had cost it more than 15 points or 1.8 percent along the way. The Kuala Lumpur Composite Index regained support at 870 points one day after giving it up, and now investors are anticipating further gains at the opening of trade on Wednesday.
The global forecast for the Asian markets is generally upbeat, with modest upside correction expected in most regional bourses after a couple of days of heavy losses. The automobile stocks have been under pressure in recent sessions but could level off - while the financials also are predicted to level off after heavy profit taking. The European markets finished sharply higher, while the U.S. markets ended more modestly in the green - and the Asian markets are likely to fall somewhere in between.
The KLCI finished slightly higher on Tuesday, as gains among the financial stocks and the industrial issues were largely offset by weakness among the plantations.
For the day, the index added 3.21 points pr 0.37 percent to close at 872.55 after trading between 867.09 and 874.07. Volume was 382.543 million shares worth 759.104 million ringgit. There were 280 gainers and 179 decliners, with 176 stocks finishing unchanged.
Among the gainers, Maybank was up 5.4 percent, Public Bank added 1.3 percent and oil firm Petronas was up 5 percent, while Resorts World, KNM Group, Malaysian Resources and MISC also increased. Bucking the trend, IOI Corp, Sime Darby, Tenaga and Bumiputra Commerce all finished lower.
Wall Street offers a positive lead as stocks moved higher throughout much of the trading session on Tuesday, although the major averages gave back some ground going into the close. The strength in the markets came as traders used the weakness in the two previous sessions as a buying opportunity.
Weak economic data helped to limit the upside for the markets, with a report from Standard and Poor's showing that home prices fell at a record annual rate in January. The report showed that the S&P/Case-Shiller 20-City Composite Home Price Index for January fell 19.0 percent compared to the same month a year ago, reflecting an acceleration from a revised 18.6 percent year-over-year decline in December.
Separately, the Institute for Supply Management - Chicago said its index of activity in the Chicago-area manufacturing sector fell to 31.4 in March from 34.2 in February, with a reading below 50 indicating a contraction in the sector. Meanwhile, the Conference Board's consumer confidence index edged up to 26.0 in March from a record low reading of 25.3 in February, although economists had been expecting a somewhat more significant increase by the index to a reading of 28.0.
In other news, the Senate Finance Committee examined the progress of the Troubled Asset Relief Program in a hearing on Tuesday, with the results of the first six months of the $700 billion financial bailout determined to have been unsteady. The program puts taxpayers at risk for $2.9 trillion, the Special Inspector General for the TARP Neil Barofsky said at the hearing.
Additionally, General Motors (GM) and Ford (F) announced new rounds of incentives, including payment protection for job losers, to boost customer confidence and jump-start vehicle sales. GM unveiled its GM Total Confidence plan, whereby customers can get payment protection for the first 24 months of ownership. Meanwhile, Ford launched its new Ford Advantage Plan, under which Ford will provide 12 months of payment protection.
The major averages pulled back well off their highs for the session in late day trading but managed to remain firmly positive. The Dow closed up 86.90 points or 1.2 percent at 7,608.92, the Nasdaq closed up 26.79 points or 1.8 percent at 1,528.59 and the S&P 500 closed up 10.34 points or 1.3 percent at 797.87.
In economic news, Malaysia's current account surplus declined to 30.4 billion ringgit in the fourth quarter from 38.7 billion ringgit in the third quarter, the Department of Statistics said on Tuesday. In the fourth quarter, the surplus on goods decreased to 38.9 billion ringgit from 49.2 billion ringgit in the preceding quarter. At the same time, the services account recorded a surplus of 0.7 billion ringgit, reversing the deficit of 0.2 billion ringgit in the preceding quarter.
Meanwhile, the deficit on the income account narrowed to 5.2 billion ringgit from 5.8 billion ringgit in the third quarter. The deficit on the current transfers account fell to 4 billion ringgit from 4.5 billion ringgit in the preceding quarter. For all of 2008, the current account surplus stood at 129.9 billion ringgit, up from a surplus of 100.4 billion ringgit in the previous year.
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