The local bourse ended the week higher, rising in tandem with the regional markets which were buoyed by good news coming out of the US. W-o-w, the benchmark FBM KLCI gained 12.92 points or 1.07% to close at 1,221.2 last Friday.
On the regional front, the Hang Seng Index gained 462 points w-o-w to close at 21,623.4 last Friday while the Taiex added 189.41 points to close at 7,526.55. The Jakarta Composite Index finished at 2,456.98 last Friday, climbing 41.04 points from the previous Friday.
The Nikkei 225 and Straits Times Index, however, declined by 73.79 points and 25.04 points to close at 10,370.54 and 2,655.99 respectively.
On the New York Stock Exchange, the Dow Jones Industrial Average rose 178.51 points or 1.86% w-o-w to end at 9,783.92 last Thursday.
The regional markets continued to ride the recovery on Wall Street, which was supported by more positive data that suggested the US economy had bottomed out. The US Labor Department said last Thursday that jobless claims dipped — for the first time since the crisis hit — to 545,000 last week from 557,000 previously, indicating that job cuts could be easing.
However, analysts expect a pullback on the NYSE this week, believing that the rally in shares may have outpaced earnings growth prospects because FedEx Corp and Oracle Corp reported lower-than-expected results.
Nevertheless, global market sentiment is likely to remain upbeat, driven by cheap US dollar-funded carry trades as risk appetite continues to increase and more evidence emerges supporting the belief that the global economy is recovering, says SJ Securities.
Last week, Singapore reported the smallest drop in exports in 11 months, with a 7.1% y-o-y decline in August, which augurs well for Malaysian exporters as well.
On the home front, Bursa Malaysia seemed to take a breather after a strong showing earlier in the week. Some of the laggards included big cap plantation players, which was not surprising as crude palm oil prices showed a decline.
“However, banking stocks, which have a high weighting of around 34% on the FBM KLCI, continued to draw investor interest,” says Pong Teng Siew, head of research at Jupiter Securities.
Construction and construction-related stocks were also back in favour, he adds, following an announcement that works on the RM7 billion Klang Valley LRT extension project will take off soon. Buying interest in these counters is likely to continue when trading resumes after the Aidilfitri holiday break.
For this week, TA Securities chartist Stephen Soo puts immediate support for the FBM KLCI at 1,210 to 1,200 points and resistance at 1,248 points.
This article appeared in Capital page of The Edge Malaysia, Issue 773, Sep 21-27, 2009