KLCI down 0.5% as aluminium markets weigh on Malaysian equities

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KUALA LUMPUR (April 24): The FBM KLCI fell 9.76 points or 0.5%, led by Press Metal Aluminium Holdings Bhd's share price drop and as investors evaluated the impact of higher US government bond yields on Asian equities.

At 12:30pm, the KLCI settled at 1,870.60. Press Metal shares fell 36 sen or 7.06% to RM4.74 to become the KLCI's top decliner in percentage terms. Other KLCI major decliners included Sime Darby Bhd and Astro Malaysia Holdings Bhd.

Press Metal shares fell after the US gave American customers of Russia's largest aluminium producer United Co Rusal Plc more time to comply with sanctions. Reuters quoted the US Treasury Department as saying it would consider lifting the sanctions if Rusal's major shareholder, Russian tycoon Oleg Deripaska, ceded control of the company.

In Malaysia, JF Apex Securities Bhd wrote in a note today that "the FBM KLCI could remain sideways" below 1,900 points following US stocks' overnight performance.

JF Apex said the KLCI is likely to stay below the 1,900 level amid the US corporate financial reporting season and rising US Treasury yields.

Reuters reported that the Dow Jones Industrial Average fell 14.25 points or 0.06% to 24,448.69 on Monday, the S&P 500 gained 0.15 points or 0.01% to 2,670.29 and the Nasdaq Composite dropped 17.53 points or 0.25% to 7,128.60.

World markets have taken cue from higher US government bond yields at close to 3%, which led to expectation of higher demand for US dollar-denominated assets. Reuters reported that the spike in crude oil prices has driven up both market expectations of future inflation and long-term bond yields. It was reported that the last time yields neared this number in 2013 it rocked risk appetite and sent stocks sliding.