KLCI flat after choppy trade ahead of BNM rate decision, US presidential election

KLCI flat after choppy trade ahead of BNM rate decision, US presidential election
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KUALA LUMPUR (Nov 2): The FBM KLCI closed down 0.43 point or 0.03% at 1,466.46 after choppy trades in the final hour amid a confluence of factors including the rising number of Covid-19 infections globally and lower crude oil prices ahead of an event-heavy week, which will see investors bracing for Bank Negara Malaysia’s (BNM) interest rate decision and Malaysia’s Budget 2021 announcement besides the US presidential election.

BNM is scheduled to deliver its final monetary policy decision for 2020 tomorrow, the same day the US presidential election will take place.

On Friday (Nov 6), the Malaysian government is scheduled to table the country’s Budget 2021 in Parliament.

"There is another rumour on the windfall tax on the glove sector, and hence, it has been driving the sector lower, which contributed to the lower KLCI position," Malacca Securities Sdn Bhd head of research Loui Low told theedgemarkets.com.

Earlier today, TA Securities Holdings Bhd analysts wrote in a note: "Following last Friday's sell-off to a fresh five-month low, technical trend indicators for the KLCI turned decisively bearish, which could accelerate losses despite momentum indicators registering more oversold conditions. Hence, any oversold rebound attempts this week may prove fleeting, moreover given slumping oil prices amid surging Covid-19 cases worldwide dampening the global growth outlook, ambiguity over the US presidential elections outcome, concerns over an interest rate cut pressuring banking shares and domestic political uncertainties ahead of the keenly awaited Budget 2021 tabling this Friday."

Across Bursa Malaysia at 5pm today, 5.94 billion securities were traded for RM3.29 billion. There were 688 decliners versus 365 gainers.

The KLCI ended lower after falling to its intraday low of 1,452.13. At a glance, the 30-constitiuent KLCI, which mostly traded in the negative territory today, rose to its intraday high of 1,468.09 amid choppy trades between 4pm and 5pm.

The KLCI cut losses at 5pm after Asian equity indices closed higher. It was reported that Asian shares bounced off one-month lows today, helped by Chinese factory activity expanding at its fastest pace in a decade, while oil prices skidded as many Western countries slid back into coronavirus-driven lockdowns.

It was reported that a major risk event this week is the US presidential election tomorrow with Republican President Donald Trump trailing Democratic challenger Joe Biden in national opinion polls.

"Polls in the most competitive states that will decide the election have, however, shown a closer race, still favouring Biden. MSCI's broadest index of Asia-Pacific shares outside Japan climbed 0.36%, as China's Caixin/Markit Manufacturing Purchasing Managers' Index offered hope the region's success in containing the coronavirus could spare it the economic pain being inflicted on Europe and the United States.

"The mood in Europe was downbeat with many countries in the region battling new Covid-19 infections and slipping back into virus lockdowns.

"Oil prices fell 4% on Monday on worries that widening coronavirus lockdowns in Europe would weaken fuel demand and amid concerns about turbulence over this week's US presidential election. Brent crude futures for January dropped US$1.49, or 3.9%, to US$36.45 a barrel by 0745 GMT, while US West Texas Intermediate futures fell US$1.58, or 4.4%, to US$34.21," Reuters reported.

Global crude oil price sentiment hit Bursa-listed oil and gas-related shares. Bursa's Energy index, which tracks share prices in these companies, closed down 2.42% to become the largest percentage decliner among Bursa gauges, folllowed by the Healthcare index's 1.87% drop.

Rubber glove manufacturers are constituents of the Healthcare index, which includes pharmaceutical companies and hospital operators.

Across Bursa, notable decliners included glove manufacturer Supermax Corp Bhd and plantation-related company PPB Group Bhd.

Supermax's share price closed down 56 sen or 5.91% at RM8.91 while PPB ended 30 sen or 1.6% lower at RM18.50.

Chong Jin Hun