Market gains for second day, but on thin volume

Tags: Bursa | China markets | US unemployment report

Written by InsiderAsia
Friday, 04 September 2009 17:33

Share prices on Bursa Malaysia rose again on Friday, Sept 4, extending their gains from Thursday. The market took its cue from a positive overnight close on Wall Street as well as continued gains in the Chinese stock market after the earlier sharp falls on Monday.

Volatility in the Chinese stock market has been a major factor influencing Asian bourses in recent weeks. Investors are fearful of fresh credit tightening measures to cool an overheating economy and curb the sharp growth in property and stock prices. On Friday, the Shanghai Composite Index rose for the fourth consecutive day, rising 0.6% on top of Thursday’s 4.8% rally.

However, investors around the region were also generally cautious ahead of the key US unemployment report for August, due on Friday night. The report will set the tone for Wall Street’s trading on Friday and regional bourses next week. Most expect the US unemployment rate, which dipped in July, to rise again – from 9.4% to 9.5% in August.

Ahead of the report, the latest US weekly jobs report released on Thursday was weaker than expected. New claims for jobless benefits fell less than expected last week (to 570,000 from an revised 574,000) and the number continuing to receive unemployment benefits rose.

A weak labour market suggest US consumer spending, which accounts for 70% of the economy and much of Asia’s exports, will remain weak. Similarly for the strength of the economic recovery ahead – even though most are optimistic think the recession is over.

The FBM KLCI closed 5.1 points higher at 1,178.4on Friday. Losers beat gainers by a roughly 2-to-1 ratio. However, volume stayed relatively low at 608 million shares, up slightly from 589 million shares on Thursday.

Trading volume in recent weeks has been relatively low as more investors stay on the sidelines due to the volatility in China. Globally, investors are also unsure over whether the multi-month global equities rally can be sustained with stock prices having reached most fair value levels and growth ahead likely to look weak.

Actively traded stocks on Friday include KNM, Multi-Sports, TAS, Genting, Axiata, TM and Bumiputra-Commerce. Major gainers include Dayang, Bursa Malaysia and Genting. Losers include BAT, UBG and Tanjong plc.