Malaysia shares roiled after US crude oil futures fall below zero

Malaysia shares roiled after US crude oil futures fall below zero
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(report updated)

KUALA LUMPUR (April 21): The FBM KLCI closed down 31.39 points or 2.22% at 1,381.73 today, while Bursa Malaysia’s energy index fell by a significantly larger quantum, after prices of US crude oil futures fell below zero for the first time in history.

Anticipation of Malaysia’s corporate financial reporting season for the January to March quarter is also seen influencing share trades, as investors evaluate the extend of the Covid-19 pandemic’s impact on businesses.

Across Bursa at 5pm, 6.53 billion shares were traded for RM2.94 billion. There were 827 decliners and 198 gainers, after broad-based selling across the exchange where all indices ended lower. 

The energy index, which tracks prices of oil and gas companies’ shares, fell the most after the gauge dropped 43.48 points or 6.05% to 674.87. 

"The overnight slide on Dow (Jones Industrial Average) and oil prices, coupled with technically overbought market, are likely to witness KLCI in wild swings today (range bound within 1378-1419 band). We reiterate our view that the recent relief rally would be an opportune time to take profit in this market rally, as we roll into May and the economic reality, coupled with the concerns about weaker corporate earnings should start to emerge moving forward,” Hong Leong Investment Bank Bhd wrote in a note earlier today. 

Malaysia’s corporate financial reporting season for the January-to-March quarter starts as early as April, although most companies announce their earnings in May.

Overnight, it was reported that traders desperate to avoid owning oil fled the markets on Monday, sending crude futures into negative territory for the first time ever, in recognition that the coronavirus pandemic has sapped demand for fuel and there is not enough storage for the massive glut of oil present on U.S. soil.
It was reported that investors sold the May futures contract due to expire on Tuesday, in a series of waves. It was reported that at one point, the contract hit negative US$40. 

"When the trading stopped, crude oil had ended the day at a negative US$37.63 a barrel, a decline of some 305% or US$55.90 a barrel.

"Wall Street tumbled on Monday, after U.S. crude futures turned negative for the first time ever, with traders forced to pay to unload crude, as the May contract expired during a global economic slump unleashed by the coronavirus outbreak. The S&P energy index tumbled 3.7%, after the front-month May U.S. West Texas Intermediate contract actually turned negative, with sellers offering US$37.63 a barrel to any traders willing to take it,” Reuters said.

Across Bursa today, top decliners included KLCI stocks Petronas Dagangan Bhd, Public Bank Bhd and Hartalega Holdings Bhd.

Most active stocks included oil and gas-related Velesto Energy Bhd and Hibiscus Petroleum Bhd, the prices of which declined in active trade.

Velesto closed down one sen or 6.25% at 15 sen, with some 247 million shares traded. Hibiscus fell four sen or 8.6% at 42.5 sen, with about 166 million shares transacted.

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