ZLBT Chats

Wednesday, April 15, 2009

Ambivalence prevails 15th April 2009

Investors took a step back from the burst of optimism that lifted stocks broadly higher over the past few weeks on April 15.

After chalking strong double-digit gains in little over a month, the global equity market rally took a breather as latest sobering economic data gave investors pause.

The unexpected drop in US retail sales – by about 1.1% in March – revived doubts over the health of the economy. Retail sales had increased in the previous two months, raising hopes that consumer spending has stabilised after falling sharply in the last quarter of 2008.

This latest contraction, as well as a decline in wholesale prices, tempered expectations of an imminent recovery. Consumer spending is one of the most closely monitored economic indicators as it makes up two-thirds of the US economy.

Investors were also unnerved by the guidance offered by Intel, the world’s largest chipmaker. Intel’s 1Q09 earnings results beat Wall Street’s modest expectations but the company’s forward guidance was sketchy on the basis of limited visibility.
Indeed, despite the recent spate of more upbeat bank earnings and some positive economic numbers, the overall picture for the global economy remains clouded. Investors are having a difficult time deciding if the current rally is sustainable or if markets are being set up for a bigger fall.

This ambivalence is reflected in trading in key Asian markets on April 15 where bellwether indices closed mixed with limited movements in either direction.

The KL Composite Index opened in negative territory, cautioned by Wall Street’s losses overnight. However, sentiment improved as the day progressed. The benchmark index recouped its early losses to finish three points higher at 956.7.

Market breadth also improved in the later part of the day. At the close, there were two gaining stocks for every losing one. Trading was brisk with nearly 1.66 billion shares changing hands, a fresh record high for the year.

Investor interest remained focused on lower liner stocks. KNM was, once again, the most heavily traded stock for the day.

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