KLCI down 0.5% in line with regional markets

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KUALA LUMPUR (Aug 16): The FBM KLCI pared losses for a 8.26-point or 0.5% drop in line with Asian share markets after China said it will hold trade talks with the US this month. Such sentiment raised hopes that the China-US trade war will ease.

Reuters reported that China on Thursday said a delegation led by its vice commerce minister would travel to the United States for talks in late August at the invitation of Washington. That helped Chinese stocks pare losses, with the Shanghai Composite Index and Hong Kong's Hang Seng index both down 0.4%, having earlier fallen as much as 1.9% and 1.7%, respectively, Reuters reported.

In Malaysia, the KLCI settled at 1,777.68 points at 12:30pm. The index had earlier fallen to its lowest so far today at 1,773.74 points. A broker based here told theedgemarkets.com that the stock market remains volatile with so many different news coming into the market.

"On one hand, you have the worsened relationship between the US and Turkey that led to the lira crisis. Then now, you are hearing a positive development that talks between China and the US could take place at the end of August. There [is] too much noise, so the market is likely to remain volatile," he said.

He, however, thinks that the positive development on the US and China will improve investors' risk appetite. As such, it is possible to see a recovery in the stock market in the second half of the day, he said.

Malaysian oil and gas (O&G)-related shares dropped today following a substantial overnight decline in world crude oil prices. At 12:30pm, Sapura Energy Bhd was down 0.5 sen at 58 sen while Hibiscus Petroleum Bhd fell 1.5 sen to 94 sen.

Loui Low, head of retail research at Hong Leong Investment Bank Bhd, shared the research house's technical views on O&G-related stocks with theedgemarkets.com.

"Sapura Energy is on a downtrend but is seeing sideways consolidation. Support is seen at 55 sen while resistance is at 63 sen and 70 sen," Low said. Hibiscus is showing an uptrend with slight consolidation with resistance at RM1 and RM1.15. Support level is expected at 90 sen, according to him.

Overnight, Reuters reported that oil futures slid on Wednesday, with US crude settling 3% lower after government data showed a surprise weekly increase in domestic crude stockpiles, compounding worries about the global economic growth outlook. US crude futures settled at US$65.01 a barrel, down US$2.03, or 3%. Brent crude futures were down US$1.70, or 2.35%, at US$70.76 a barrel.