KUALA LUMPUR (Feb 5): The local stock market started the trading week on a cautious note following the slump on Wall Street last Friday caused by rising expectation of a rate hike in the US occurring sooner than later. The FBM KLCI skidded to its intra-day low at 1,842.06 points, down 28.42 points or 1.5%, this morning.

The pullout is in line with the regional markets.

The oil and gas (O&G) and banking sectors plus some export-oriented stocks were the selling targets.

At the noon break, the benchmark index recouped some losses to close at 1,853.38 points, a decline of 0.9% or 17.1 points.

Only 102 counters on Bursa Malaysia managed to buck the downtrend to stay in positive territory as of noon break. Decliners led gainers by 975 to 102 with the remaining 231 counters traded unchanged. Trading volume stood at 1.5 billion units worth RM1.31 billion.

Among the top gainers are some of the consumer names such as Nestle (M) Bhd, Fraser & Neave Holdings Bhd, Heineken Malaysia Bhd, Dutch Lady Milk Industries Bhd and the domestic marketing arm of Petronas, Petronas Dagangan Bhd.

The top losers include KESM Industries Bhd, United Plantations Bhd, British American Tobacco (Malaysia) Bhd, Hengyuan Refining Co Bhd and Petron Malaysia Refining & Marketing Bhd.

The most active counters are dominated by O&G-related counters such as Hibiscus Petroleum Bhd, Sapura Energy Bhd, Sumatec Resources Bhd, UMW Oil & Gas Corp Bhd and budget airline operator, AirAsia X Bhd.

Hong Leong Investment Bank's head of retail research, Loui Low told theedgemarkets.com that the cautious sentiment has led to the decline seen in the market.

"The pullback is just a reaction to the selldown seen in the US on Friday. From a technical point of view, we see some consolidation in the index to between the 1,830 and 1,850 level as we approached the Chinese New Year," Low said.

He added that the small caps are the biggest losers so far as the decline was already seen since a week ago.

Malacca Securities Sdn Bhd has expected a meaningful consolidation for the FBM KLCI.

"We think a meaningful consolidation could lead the FBM KLCI back to the 1,820-1,850 levels, which would allow the key index to take a breather after the strong recent gains and to build up a base for another run later," it said.

Last Friday, the Dow Jones Industrial Average fell by 665.75 points or 2.5% to 25,520.96 points. Similarly, the S&P 500 Index dropped by 59.85 points or 2.1% to 2,762.13 points while Nasdaq Composite Index was down by 144.92 points or 2% to 7,240.95.

The decline came as the 10-year US Treasury yield jumped to a four-year high following a better-than-expected jobs report that reflected rising wages in the US, raising concerns on the impact of inflation to risk appetite on risky assets such as the stock market.

Across Asia, most markets are down; Japan's Nikkei 225 fell by 513.77 points or 2.2% to 22,760.76 points, Hong Kong's Hang Seng Index was down by 578.99 points or 1.78% to 32,022.79 points while South Korea's Kospi also fell by 32.08 points or 1.3% to 2,493.31 points. Jakarta Composite Index was also down by 24.3 points or 0.4% to 6,604.52 while Singapore's Straits Time Index fell by 48.28 points or 1.4% to 3,481.54 points.