KLCI falls 1.5% as confluence of weak oil prices and pandemic fears pummel global markets

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KUALA LUMPUR (April 22): The FBM KLCI extended its losses  and fell 1.5% in early trade Wednesday as a confluence of weak crude oil prices and pandemic fears continued to pummel global equity markets.

Crude oil’s collapse is deepening.

Just a day after U.S. crude futures for May delivery plunged below zero for the first time ever, June futures plummeted 43% to close below $12 a barrel in New York. A massive supply glut brought on by the pandemic and a worldwide shortage of storage space have touched off a relentless rout that has shifted the entire forward curve for oil, according to Bloomberg.

At 9.05am, the FBM KLCI lost 20.91 points to 1,360.82.

The early decliners included Nestle (M) Bhd, Carlsberg Brewery Malaysia Bhd, Heineken Malaysia Bhd, Hong Leong Financial Group Bhd, Panasonic Manufacturing Malaysia Bhd, Hong Leong Industries Bhd, Kuala Lumpur Kepong Bhd, KESM Industries Bhd and United Plantations Bhd.

Bloomberg said Asian stocks retreated Wednesday after a risk-off session on Wall Street, amid continued volatility in energy markets and further signs companies are finding it hard to provide outlooks. Crude edged up after a two-day tumble.

Shares fell in Tokyo, Seoul and Sydney though declines were shallower than those in the U.S. on Tuesday. S&P 500 futures were little changed after the gauge closed down more than 3%, with investors shrugging off a deal reached by the White House and congressional leaders on fresh spending to combat the impact of the coronavirus pandemic. June crude futures rose as much as 20%, after tumbling more than 50% over the previous two sessions. The yield on benchmark 10-year Treasuries was steady after dropping below 0.6%, it said.

Rakuten Trade in its daily market report today said that there is no place to hide as almost all asset classes are being affected by the chaotic situation from both Covid-19 and crude oil prices alike.

“Therefore, we would expect market correction to continue today as displayed by the broad base decline on Wall Street overnight.

 “The 630 points drop by the Dow Jones Industrial Average should put some pressure on regional markets.

“On the local front, the FBM KLCI should see selling to persist today with the 1,370 as the immediate support level,” it said.

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