RTTNews - The Malaysian stock market has ended in the red in consecutive trading days, although it has shed slightly less than four points or 0.38 percent along the way. The Kuala Lumpur Composite Index is maintaining support at 1,070 points, and now investors are looking forward to a mild rebound at the opening of trade on Wednesday.
The global forecast for the Asian markets is slightly positive, with the financial shares expected to stage a minor rally while the automobile producers may see some caution. Some lukewarm economic data out of the United States may slightly boost sentiment, as might commodities on a weaker greenback. The European markets were mixed, while the U.S. bourses ended generally higher - and the Asian markets are also expected to trade in mixed fashion.
The KLCI finished barely lower on Tuesday, as weakness in the financial sector was enough to push the market into negative territory - although the decliners were offset somewhat by slim gains among the plantations and the industrials.
For the day, the index eased 1.06 points or 0.10 percent to close at 1,071.79 after trading between 1,066.99 and 1,076.29. Volume was 1.415 billion shares worth 1.207 billion ringgit. There were 311 decliners and 306 gainers, with 259 stocks finishing unchanged.
Among the decliners, Maybank was down 2.70 percent and Bumiputra Commerce lost 1.10 percent, while Telekom and KNM Group also ended in the red. Finishing higher were Hovid Bhd-Warrants, Oilcorp, Hovid and Sime Darby.
The lead from Wall Street is cautiously optimistic as stocks showed some life in afternoon trading on Tuesday, finishing largely on the upside after being plagued by choppy trading for much of the session. The NASDAQ and S&P 500 saw some strength on the day, while the Dow drifted lower just before the closing bell.
The U.S. Department of Treasury announced that 10 of the largest U.S. financial institutions borrowing money from the Treasury are planning on paying back their loans. Organizations such as JP Morgan Chase (JPM), U.S. Bancorp (USB) and Bank of New York Mellon (BK) will repay a total of $68 billion.
President Barack Obama praised the move, noting that the government has turned a profit from the first round of repayments. He also offered cautious optimism that the financial system is stabilizing. While Obama said that the announcement that banks are relying less on Treasury assistance is welcome news, he said it does not excuse the actions of the banks. The president also announced his intention to instate the pay as you go program, restricting the amount of money lawmakers can spend to only what they can save in other areas.
On the economic front, wholesale inventories fell by a little more than expected in the month of April, according to a report released by the Commerce Department on Tuesday, with the report also showing a modest decrease in wholesale sales. The report showed that wholesale inventories fell 1.4 percent in April following a revised 1.8 percent decrease in March. Economists had expected inventories to decrease by about 1.1 percent compared to the 1.6 percent drop originally reported for the previous month.
Additionally, the Commerce Department said that wholesale sales edged down 0.4 percent in April after falling by a more significant 2.4 percent in March. Wholesale sales were down 19.5 percent compared to the same month a year ago.
In corporate news, bankrupt automaker Chrysler's planned asset sale to a group led by Italian automaker Fiat was thrown into uncertainty after a U.S. Supreme Court Justice issued a stay on the sale. The stay was sought by a group of Indiana pension funds.
General Motors Corp. (GMGMQ.PK) also announced that Edward Whitacre Jr., former chairman and Chief Executive Officer of AT&T (T) would become chairman of the new GM when the company is re-launched later this summer. Kent Kresa will continue to serve as interim chairman until the launch.
Stocks finished the day mostly higher, led by gains in the technology sector. The tech-heavy NASDAQ closed up by 17.73 points or 1 percent at 1,860.13 and the S&P 500 rose 3.29 points or 0.4 percent to 942.43, while the Dow slipped by 1.43 points or less than a tenth of a percent to 8,763.06.
In economic news, Malaysia will on Wednesday release April figures for industrial production, with analysts calling for a 14 percent annual contraction following the 14.4 percent decline on year in March.
Also, Fitch Ratings on Tuesday lowered Malaysia's local currency Issuer Default Rating to 'A' from 'A+' and revised its outlook to stable from negative. The firm also affirmed the country's long-term foreign currency IDR at 'A minus', the short-term IDR at 'F2' and Country Ceiling at 'A'. The outlooks on these ratings remain stable.
Fitch's rating action on Malaysia's Long-term local currency IDR reflects the sovereign's notable deterioration in its public finances position when measured against the 'A'-rated peer group, Ai Ling Ngiam, director with Fitch's Asia-Pacific Sovereigns team said.
The firm forecasts the central government's debt to rise to a 22-year high of 7.5 percent of GDP this year and 8.7 percent next year. Moreover, Fitch expects the general government deficit to widen to 7.7 percent of GDP this year, almost double the median 4 percent of 'A' rated peers. In the next year, Fitch forecasts the general government deficit to hit 57 percent of GDP, the highest since 1992, and also higher than the median debt of 49 percent of GDP of the 'A' rated peers.
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