The FBM KLCI surged 18.4 points to 1,139.3, another new high for the year. Market breadth was positive with advancing stocks beating declining ones by a 2.8-to-1 ratio. Trading volume, however, remained moderate by the recent rally standards, with just over 1 billion shares changing hands.

Actively traded stocks include KNM, Axiata, Kinsteel, Time, MRCB, MK Land, UEM Land and Gamuda. Major gainers comprised mostly blue chips such as Parkson, IJM, PPB, Tenaga and Genting. Losers include Nestle and Astro.

Regional bourses continued to rally after Wall Street posted its best week since March, and resumed the multi-month long rally that had threatened stalled for much of June and July. Sentiment was boosted after earnings from major financial firms like Goldman Sachs, Intel and IBM raised hopes that the economy is recovering.

On the local front, Public Bank kicked off the earnings season with resilient profits. Net profit for the second quarter rose 3% to RM610.7 million, with continued strong loan growth. There were also some corporate leads for investors from M&A activities in the Selangor water sector, as well as a sharp rise in crude palm oil prices.

More corporate earnings are expected from major US companies this week, including American Express, Boeing, Caterpillar, Apple and Coca Cola, which will form a wider spectrum view of the health of the US economy and the recovery process. With optimism running high, any signs of major earnings disappointment, could however, derail the current rally.   

Federal Reserve Chairman Ben Bernanke will make his semi-annual report to Congress on Tuesday and Wednesday, and investors will also assess his views on the economy.