FBM KLCI rises to new year high

Written by InsiderAsia
Friday, 16 October 2009 17:42

Shares on Bursa Malaysia traded broadly higher on Friday, with the FBM KLCI rising to a new year-high and crossing the psychologically important 1,250-level.

The local stock market took its lead from another positive overnight performance on Wall Street, where the Dow Jones Industrials Average index stayed above the 10,000-point mark for the second day. Most regional stock markets, however, edged lower as investors digested recent strong gains and await fresh leads from the US.

Wall Street gained as a rise in crude oil prices boosted energy stocks and weekly employment numbers came in better than expected. The number of newly laid-off workers filing claims for unemployment insurance last week fell to its lowest level since January. That helped to offset disappointing bank earnings, notably from Citigroup.

The FBM KLCI was in positive territory the entire day, with gains accelerating in the afternoon session. The key index ended 9.9 points higher at 1,256.8. Market breadth was positive with advancing stocks beating declining ones by a two-to-one ratio on relatively high volume of 1.15 billion shares.

Less capitalised stocks dominated trading on Friday, led by the likes of DBE, KNM, TA, Notion VTec, 3A Resources and Jasakita. Blue chips comprised most of the major gainers, including IGB, Hume, RHB Capital, KL Kepong, CIMB and Tenaga. Losers include DiGi and Kulim.

Continued weakness in the US dollar sent commodity prices higher, with crude oil rising to a new year high of near US$78 per barrel. Gold, however, fell back slightly to US$1,050 an ounce. The ringgit rose to near a 14-month high of RM3.37 versus the greenback.

Apart from US dollar weakness, the recent rise in commodity prices has been viewed positively as a sign of a recovering global economy However, one should note that pronounced increases in commodity prices and falls in the US dollar will have repercussions on inflation, still-fragile growth and the ability of the US to fund its deficits.

Going forward, investors will take their cues from US corporate earnings season, which will determine the direction of Wall Street and global equity bourses. Investors will look towards our 2010 Budget – to be tabled on Oct 23 as well as the earnings season next month.