Stock market rally continues

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The local stock market’s rally continued on April 10, adding on to the previous day’s already sizable gains. Wall Street’s relentless rally remains the major catalyst, sending most regional stock markets to their highest levels in six months. On the local front, investors also welcomed the new Cabinet line-up unveiled on April 9, as well as the recent rally in crude palm oil prices. The Dow Jones Industrials Average index had surged 3.1% on April 9, ahead of the Easter holidays, after financial group Wells Fargo said it expected about US$3 billion in first-quarter profits. With investors worried about the moribund state of the US financial system, any sign of good news or recovery here was welcomed. Wall Street has been rising for five consecutive weeks, extending a strong rally that started in March due to a rash of better than expected US economic data, particularly in housing and durable goods orders, although the labour market remains soft. This is leading to optimism for a bottoming for the US economy in the not too distant future. The KLCI surged 23.5 points to end at 941.4 on April 10, extending April 9’s 10-point gain. Advancing stocks beat declining ones by a wide 5.5-to-1 margin. Trading volume was very high with 1.16 billion shares changing hands, up 62% from April 9’s 715 million shares. Actively traded stocks include KNM, Gula Perak, Maybank-OR, Resorts, MRCB and Mulpha. Major gainers include BAT, KL Kepong, Sime Darby, Tenaga and Public Bank-foreign. Losers include Choo Bee, Ingress and Subur. The sustainability of global markets’ recent gains – and scope for more – will depend on upcoming economic and corporate data. They will either help confirm or dispel investors’ recent optimism about the economy, noting the strong expectations of a recovery later this year. A number of key US economic data for March are due next week, along with corporate earnings.