KUALA LUMPUR (May 19): The FBM KLCI closed 0.12% lower today, in line with regional markets, on renewed concerns that the United States' Federal Reserve (Fed) would hike interest rates next month.
At 5pm today, the KLCI declined 1.96 points to 1,633.76.
A head of research, who requested for anonymity, said renewed concerns of interest rate hikes in the US have weighed down the local bourse as well as regional markets.
He also said the local bourse is facing the brunt of low sentiment with the rebalancing of Malaysian stocks on one of the key indices of the Morgan Stanley Composite Index, which fuelled the highest foreign sell-off this year when foreign investors offloaded RM1 billion last week.
"Because of the downgrade, the effect will take place at month-end so that is why you see selling pressure now. It will take some time for sentiment to return," he added.
However, he said the market is expected to rebound.
"To us, anything below 1,735 points is our buying zone, which is now. Coupled with some oversold, technical conditions, we should expect some sort of rebound," he said.
Decliners led gainers by 415 counters to 355 counters, while 377 counters remained unchanged. Some 1.39 billion shares, valued at RM1.81 billion, were traded across the bourse today.
Top decliners included Aturmaju Resources Bhd, Genting Bhd, Malayan Banking Bhd, UMW Holdings Bhd and Ta Ann Holdings Bhd.
Vivocom International Holdings Bhd was the most actively traded counter with 64.12 million shares done, followed by AirAsia X Bhd with 60.36 million shares.
Meanwhile, top gainers were led by British American Tobacco (Malaysia) Bhd, followed by Scientex Bhd, Ajinomoto (Malaysia) Bhd, Carlsberg Brewery Malaysia Bhd, and Nestle (Malaysia) Bhd.
Asian stocks fell on Thursday as markets scrambled to factor in the possibility of another interest rate increase by the Fed as early as June, Reuters reported today.
The report stated that according to a Moody's Investors Service note, rising leverage in China and emerging markets in general is an even greater concern now that the possibility of another US interest rate hike this summer is back on the table.
The Fed's minutes highlighted policymakers' views that it would be appropriate to raise interest rates in June if economic data points to stronger second-quarter growth as well as firming inflation and employment, Reuters said.
Speculation on interest rate hikes sent the US dollar, which fuelled a retreat in crude oil prices and weighed down on the ringgit.
At 4.59pm, the ringgit weakened against the greenback by 0.78% to 4.082, while the June futures West Texas Intermediate (WTI) contract was trading 1.85% lower at US$47.30 per barrel, as the Brent Crude slipped 1.98% to US$47.96 per barrel.
Regionally, Japan's Nikkei 225 inched 0.01% higher to 16,646.66 points, while Hong Kong's Hang Seng closed 0.67% lower at 19,694.33 points; South Korea's Kospi slid 0.51% to end the day at 1,946.78.