KLCI up 17.98 points, ringgit strengthens after US rate cut

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KUALA LUMPUR (Oct 31): The FBM KLCI today closed 17.98 points or 1.14% higher as local stocks tracked Asian share gains after the US cut interest rates on Wednesday.

US rate cuts bode well for Asian assets like currencies, stocks and bonds in anticipation of capital flow into these higher-yielding instruments.

In Malaysia today, banking stocks led the KLCI's rise while the ringgit strengthened. At 5pm, the KLCI closed at 1,597.98 , led by Public Bank Bhd and CIMB Group Holdings Bhd.

Inter-Pacific Securities Sdn Bhd research head Pong Teng Siew told theedgemarkets.com the US rate cut provided a stable backdrop for the Malaysian stock market to climb.

Pong said foreign selling of Malaysian shares is seen to be tapering. Noting that the local stock market appears to have bottomed-out, Pong believes that the market should continue to rally.

“But the question now is how strong would the rally be,” said Pong. He said Malaysia's current corporate financial reporting season for the July-to-September quarter will partly influence the stock market’s direction.

Across Bursa Malaysia today, 2.95 billion shares worth RM2.7 billion were traded after broad-based buying across the exchange. The FBM ACE index closed up 86.82 points or 1.78% at 4,973.11 while the financial services gauge rose 336.81 points or 2.2% to 15,656.95.

Among the KLCI's 30-components, Public Bank was the biggest percentage gainer after the stock closed up 90 sen or 4.64% at RM20.30 followed by CIMB Group Holdings Bhd. CIMB ended 16 sen or 3.14% higher at RM5.25.

In currency markets, the ringgit appreciated to 4.177 against the US dollar at the time of writing in an apparent response to the US rate cut, which had also supported Asian stock gains.

Reuters reported that Asian shares jumped on Thursday to a three-month high and the dollar fell broadly after the Federal Reserve cut interest rates as expected and US Treasury yields declined.

It was reported that the Fed lowered its policy rate to 1.5%-1.75%, but dropped a previous reference in its statement to “act as appropriate” to sustain the economic expansion.