KLCI drops 0.08% as higher crude oil prices offset U.S. rate hike expectation

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KUALA LUMPUR (Oct 7): The expectation of strong jobs growth in the U.S. in September — and with that, an imminent rate hike — has sent markets in the region into the red, with the FBM KLCI not spared. The local index closed 1.35 points or 0.08% lower at 1,665.38.

Dragging down the KLCI were blue chips like AMMB Holdings Bhd, Axiata Group Bhd, DiGi.Com Bhd, Genting Malaysia Bhd and Hap Seng Consolidated Bhd.

But its fall was more benign, compared with its regional peers, which Inter-Pacific Securities Sdn Bhd head of research Pong Teng Siew attributed to improved crude oil prices.

At 5:19 p.m., spot price for benchmark Brent was up 0.3% at US$52.67 a barrel, the highest in nearly a year. The declining crude stockpile in the U.S. has been lending support to the Organization of Petroleum Exporting Countries’ decision to trim output in their effort to push oil prices up.

The ringgit, however, fell by 0.2% to 4.156 against the U.S. dollar.

“The ringgit’s direction today was quite symptomatic towards the expectation of a December rate hike in the U.S. The U.S. dollar is becoming stronger against many other countries as a result,” Pong told theedgemarkets.com over telephone today.

“In the long run, if crude oil prices continue to rise, it could lead to a stronger ringgit. Just that today, it was affected by the potential interest rate hike in December.”

The US Bureau of Labor Statistics is set to release September’s nonfarm payroll numbers today. Reuters’s poll showed economists expected an increase of 175,000 jobs last month, from 151,000 in August, according to the newswire.

Across Bursa Malaysia today, a total of 1.35 billion shares, worth RM1.57 billion, were traded. Decliners outnumbered gainers 405 to 324.

Perak Transit Bhd was the most active stock, as investors took profit from the 40% rise on its maiden trading day. Joining the ranks were Perisai Petroleum Teknologi Bhd and Lion Corp Bhd.

Today’s top gainers included Panasonic Manufacturing Malaysia Bhd, United Plantations Bhd and Huat Lain Resources Bhd.

The biggest decliners were British American Tobacco (Malaysia) Bhd, Apex Healthcare Bhd and Petronas Dagangan Bhd.

Most of the indices in Asia fell today. The key ones included Japan’s Nikkei 225’s 0.23% drop, Hong Kong’s Hang Seng Index plummeting by 0.42%, Korea’s Kospi Index’s 0.56% contraction, Australia’s S&P/ASX 200 falling by 0.29%, and Singapore’s Straits Times Index losing 0.35%.

Reuters reported the UK sterling recouped some losses, after plunging to a three-decade low in Asian trade on Friday, amid growing fears of a "hard" exit by Britain from the European Union, while Asian stocks fell as investors took profits from a recent rally.