RTTNews - The Malaysian stock market has halted the three-day losing streak that had cost it a dozen points or 1.1 percent along the way. The Kuala Lumpur Composite Index is on the verge of regaining the 1,050-point level after giving it up last week, and analysts expect the market to crack that barrier at the opening of trade on Monday.
The global forecast for the Asian markets is optimistic thanks to positive economic and corporate releases at the end of last week. U.S. auto giant General Motors is expected to declare bankruptcy on Monday, although it has already been priced in by many of the markets - and it may affect auto stocks throughout the region. The European markets were mostly higher on Friday, and the U.S. bourses were sharply up - and the Asian markets are forecast to move higher as well.
The KLCI finished slightly higher on Friday, as gains among the plantation stocks and the industrial issues were almost wiped out by heavy losses among the financials.
For the day, the index was up 2.87 points or 0.28 percent to close at 1,044.11 after trading between 1,036.12 and 1,058.36. Volume was 1.769 billion shares worth 2.362 billion ringgit. There were 386 gainers and 253 decliners, with 216 stocks finishing unchanged.
Among the actives, Maybank, Bumiputra-Commerce and IOI Corp all finished slightly lower, while MISC, Public Bank and Genting all wound up flat.
The lead from Wall Street is broadly positive as stocks saw some further upside over the course of the trading day on Friday after a considerable upward move in the previous session. A late-session rally helped the major averages to finish the month of May on a high note, further building on recent gains.
Early this morning, traders digested a revised May consumer sentiment report from Reuters and the University of Michigan that showed its best results in eight months. The revised reading came in at 68.7, higher than the previously reported reading of 67.9. The result was also higher than April's final level of 65.1. Analysts expected the survey to yield a reading of 68.0.
Separately, the Commerce Department said that gross domestic product for the first quarter contracted, although at a slower rate than previously estimated. Specifically, the data said that gross domestic product fell 5.7 percent in the first quarter compared to the advance estimate of a 6.1 percent decrease. Economists had been expecting the pace of contraction to be revised to 5.5 percent.
Meanwhile, optimism was limited by manufacturing data from the Chicago area that continued to show a notable slowdown in the region. The ISM-Chicago said its index of activity in the manufacturing sector fell to 34.9 in May from 40.1 in April, with a reading below 50 indicating a contraction. Economists expected the index to edge up to a reading of 42.0.
On the corporate front, automaker General Motors (GM) plans to file for bankruptcy protection on Monday, according to reports. Most of the company's assets would be sold to a new company sponsored by the U.S. Treasury Department. UAW-represented employees have ratified modifications to the GM-UAW 2007 national labor agreement. The amended agreement covers about 54,000 hourly employees located in 46 U.S. facilities and is expected to help GM restructure when it enters bankruptcy.
In other news, President Barack Obama announced the establishment of a cyber security office. The new office is expected to establish a system that will restrict outside access to government networks, which have been identified as an area of concern by the administration. In addition to announcing the new office, Obama also stated his goal for a new education initiative aimed at increasing awareness of cyber security threats.
The major averages soared in the last 30 minutes of trading, closing near their best levels of the day. The Dow closed up 96.53 points or 1.2 percent at 8500.33, the NASDAQ closed up 22.54 points or 1.3 percent at 1774.33, and the S&P 500 finished up 12.31 points or 1.4 percent at 919.14. The gains helped the major averages close higher for both the week and the month of May. The Dow rose 4.1 percent for the month, adding to the gains posted in both March and April. The NASDAQ and the S&P 500 posted monthly gains of 3.3 percent and 5.3 percent, respectively.
In economic news, Malaysia's leading index, a measure of economic performance in the next few months, rose 0.5 percent month-on-month in March to 159 points, the Department of Statistics said on Friday. The six-month smoothed growth rate stood at 0.2 percent in March versus minus 0.7 percent in February.
However, the coincident index, a measure of current economic activity, fell 1.4 percent on a monthly basis to 112.5 points in March. The six-month smoothed growth rate was minus 10 percent in March compared to minus 8.6 percent in the preceding month. The statistical office said the six-month smoothed growth rate of Leading Index has gradually improved since January this year, after recording the lowest rate in December last year.
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