Higher on Wall Street’s gains

Monday, 24 August 2009 17:35

Asian stocks started trading for the new week on a stronger footing. Taking cues from Wall Street’s gains last Friday, where the Dow Jones Industrial Average closed at a fresh high for the year, bellwether indices in the region opened sharply higher on Monday morning, Aug 24.

Shares rallied across the board, recouping part of last week’s losses. Japan’s Nikkei index finished 3.4% up while Hong Kong’s Hang Seng index closed 1.7% higher for the day. Investor confidence got a shot in the arm from US Federal Reserve chairman, Bernanke who talked up the prospects for a near-term recovery in the world’s largest economy.

Sentiment was also bolstered by stronger than expected jump in sales of existing homes in the US.Shares on the Bursa Malaysia too traded on a firmer note on Monday. The FBM KLCI opened higher and stayed in positive territory throughout the trading day.

The benchmark index eventually ended almost 11 points higher at 1,174.5. Market breadth also stayed positive throughout the trading day. At the close, there were roughly five gaining stocks for every three losing ones. Some of the top gainers for the day include BAT, Genting, Tanjong plc and MISC.

At the other end, Dutch Lady Milk Industries, Lafarge Malayan Cement and Petronas Gas were among the notable losers.Market volume, however, was relatively low. Just about 695 million shares were traded. The comparatively lackluster volume suggests that most investors remain cautious despite the upbeat sentiment prevailing in world equity markets.

Many are staying on the sidelines, for now.Indeed, market observers are still divided as to the near term outlook. Stocks have come a long way since mid-March 2009 and whilst there is strong evidence that the worst of the recession is in the past, the recovery could be elusive. Upcoming reports, including the latest reading on US consumer confidence due later in the week, could sway market sentiment