KLCI rebounds, ringgit weakens ahead of US rate decision

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KUALA LUMPUR (Dec 16): The FBM KLCI gained 11.29 points or 0.7% as regional shares rose. Global shares gained ahead of the conclusion of the two-day US Federal Reserve's Federal Open Market Committee (FOMC) meeting today.

The FOMC meeting 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 1,634.13 at 5pm today. Across Asia, Japan's Nikkei 225 rose 2.61%, Hong Kong's Hang Seng increased 2.01% while South Korea's Kospi climbed 1.88%.

"The global markets are anxiously awaiting the outcome of the Federal Reserve meeting tonight, in which the majority of investors anticipate that US interest rates will be increased for the first time in almost 10 years," FXTM Research analyst Lukman Otunuga wrote in a note today.

In Malaysia, remisiers told theedgemarkets.com that the KLCI could have seen a technical rebound following recent days' losses.

"The index rebounded after falling over the past six days, probably due to some bargain hunting by market participants. The rise is in line with the stronger overnight close by US markets, and the general positive sentiment in regional markets," the remisier said.

Yesterday, the KLCI fell 7.12 points after declining 10.18 points on Monday.

Today, Bursa Malaysia saw 1.67 billion shares worth RM1.77 billion exchanged. Gainers beat decliners at 525 against 292.

The leading gainer was Ajiya Bhd while Nestle (M) Bhd was the top decliner. The most-actively traded stock was XOX Bhd.

In currency markets, the ringgit weakened to 4.3160 against the US dollar.

Reuters reported that Asian stocks rose briskly on Wednesday, with sentiment lifting as Wall Street rose before a likely hike in US interest rates, while the dollar held to large gains made as Treasury yields picked up.

The Federal Reserve is expected to announce a hike in interest rates when its two-day policy setting meeting ends later in the day. It would be the first US rate hike in nearly a decade, signalling the beginning of an end to an expansionary monetary policy that has supplied a tidal wave of liquidity to risk asset markets globally.

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