First gain in seven days for FBM KLCI

The new month got off to a slightly positive start for the local bourse on Tuesday, Feb 2, as the FBM KLCI ended with small gains although the broader market was more mixed.

The FBM KLCI ended 4.6 points higher at 1,263.8. Market breadth was mixed, with an almost equal number of advancing and declining stocks.

Still, it was the first positive close for the index in seven trading days – after it had lost a total of 49 points in the las six trading days of January.

Actively traded stocks include LCL Corp, Talam, MEMS, Focus, Linear, IOI Corp, KNM and AMMB. Major gainers include Tanjong, Hai-O and MISC. Losers include PPB, F&N and Adventa.

Stock markets around the region were also generally mixed on Tuesday, despite the strong overnight performance on Wall Street amid stronger than expected US manufacturing data.

Investors appear ambivalent about the latest two sets of better than expected US data – manufacturing and fourth quarter US GDP. Investors are noting that the US economy’s 5.7% fourth quarter growth was largely due to inventory rebalancing, and foreshadow a slower pace of growth in the coming quarter.

The growing cautiousness of investors is due to the slew of recent uncertainties ranging from China’s credit tightening measures to sovereign debt problems in Europe, and the outlook for the US economy amid high unemployment.

At the heart of it are investor expectations. These concerns come amid a backdrop of spectacular gains for global stock markets in 2009, especially since March. Thus, many investors are inevitably locking in their sizable gains and would prefer to wait out the prevailing uncertainties.

It also takes much more to satisfy investors when expectations – and stock prices – are higher. The current US earnings season has seen the majority of companies beating consensus estimates, but their stock prices did not react. The bar had already been set higher after the rally, unfortunately.