KUALA LUMPUR: The KLCI closed 7.4 points or 0.43% lower at 1709.18 points today, driven down by the continued slump of the ringgit and crude oil prices, with the latter hitting fresh 5-1/2 year lows as worries mount over a supply glut.
Reuters earlier reported that crude oil had fallen almost 10% this week. Benchmark Brent crude futures was at US$50.47 a barrel, their lowest level since May 2009, before edging back to US$50.60 a barrel. US futures fell to April 2009 lows of US$47.27 a barrel before edging back to US$47.37.
The ringgit also faced more selling pressure due to the oil price slump. At the time of writing, it was trading at 3.5817 against the dollar. Bloomberg earlier said the currency had fallen to 3.5862, the lowest since July 2009, and has lost 2.4% this year.
The Edge Financial Daily today, quoting a local economist, said 1 Malaysia Development Bhd (1MDB)'s failure to settle a RM2 billion loan was also one of the factors contributing to the extended drop in the ringgit against the dollar.
JF Apex analyst Lee Cherng Wee told theedgemarkets.com that despite a technical rebound during the day, in line with regional markets, market weakness would remain for the medium term.
"I think oil prices will continue to decline unless OPEC (Organization of the Petroleum Exporting Countries) decides to change its mind [about cutting production levels]. The lowest it may go is around the US$40 per barrel, but I don't see it going lower than that," he said.
"The ringgit, unfortunately, may continue to be impacted this year. But that may change if Bank Negara Malaysia decides to raise interest rates in the second half of the year, after taking into account the GST," he added.
Market breadth was mixed with 352 decliners and 413 gainers, while 296 counters remained unchanged.
The top gainers included British American Tobacco (M) Bhd, Danainfra Nasional Bhd, My E.G. Services Bhd and Syarikat Takaful Malaysia Bhd.
Decliners included United Plantations Bhd, Petronas Dagangan Bhd, UMS Holdings Bhd and Petronas Gas Bhd.
The most active stock was Minetec Resources Bhd, with about 81 million shares done.
Regionally, Hong Kong's Hang Seng closed 0.83% higher, Japan's Nikkei 225 ended 0.01% up, while Australia's ASX 200 closed 0.21% lower.