KLCI extends losses ahead of US Fed meeting

KLCI extends losses ahead of US Fed meeting
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KUALA LUMPUR (Dec 15): The FBM KLCI fell 7.12 points or 0.44% on persistent selling pressure ahead of the US Federal Reserve (Fed)'s Federal Open Market Committee (FOMC) meeting.

The two-day FOMC meeting, which ends tomorrow, is closely watched in anticipation that US policy makers may raise interest rates. A US rate hike does not bode well for emerging Asian markets like Malaysia, as investors turn their attention to US dollar-denominated assets.

In Malaysia, the KLCI closed at 1,622.84 at 5pm today after a sharp decline in the final trading minutes. Yesterday, the index fell 10.18 points.

Analysts and dealers said besides US rate sentiment, investors were still mindful of crude oil prices and the ringgit.

"Currently, the uncertainty over US interest rates is fuelling the volatility in the market, while the weak oil prices and ringgit continues to pressure the index.

"There could be some reprieve in the KLCI, following the conclusion of the meeting which could provide some clarity for global markets," a dealer told theedgemarkets.com.

Reuters reported that an expected US rate increase at this week's Fed's monetary policy meeting had made investors wary.

"Investors remain jittery before the event, but after some correction, the market will likely provide bargain hunting opportunities," Rakuten Securities chief strategist Masayuki Kubota was quoted as saying.

Weaker crude oil prices dampened sentiment. According to Bloomberg data, US crude oil fell to US$36.09 a barrel while Brent oil dropped to US$37.62.

The ringgit was traded at 4.3115 against the US dollar. The ringgit had weakened to current levels over the last one year from its strongest point at 3.4635 on Dec 18, 2014.

Today, Bursa Malaysia saw 1.43 billion shares worth RM1.66 billion exchanged. Gainers edged out decliners at 387 against 386.

The leading gainer was Top Glove Corp Bhd while the top decliner was British American Tobacco (M) Bhd. The top-active counter was Red Sena Bhd warrant.

Across regional share markets, Japan's Nikkei 225 fell 1.7% while Hong Kong's Hang Seng declined 0.17%. South Korea's Kospi gained 0.27%.

Reuters reported that Asian shares edged up on Tuesday, but moved off their session highs amid caution about volatile crude oil prices and ahead of this week's widely anticipated US interest rate increase.

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