KLSE >>> Flat trading as investors digest recent gains 17 April 2009

The local stock market traded relatively flat on April 17, as investors digested the recent strong gains. Wall Street’s relentless rally has given ammunition and confidence to equities investors globally.

However, with Wall Street rallying for six consecutive weeks now, perhaps some intermittent profit-taking and consolidation can also be expected – even if the outlook is starting to look better. Much will also continue to depend on forthcoming US economic data and corporate profits – to confirm investors’ optimism that a recovery is in sight.

Wall Street’s further gains the previous day led the local stock market to open higher. However, the KLCI was soon confined to trade within a narrow range, even dipping into marginal negative territory briefly.

Thanks to a late spurt of buying, the KLCI closed 3.9 points higher at 965.2. Market breadth was negative for much of the day, and ended with declining stocks beating advancing ones by a 3-to-2 margin. Trading volume declined from the previous day’s year high of 1.97 billion to 1.01 million – still a very high figure.

Over the past week, the KLCI has risen 23.8 points, or 2.5% – bringing its total gains to a sizable 121.8 points over the past five weeks.
Actively traded stocks include KNM, UEM Land, E&O, Axiata, Iris, Compugates and Mulpha. Major gainers include Bintulu Ports, MSC, Proton, Tenaga and Bumiputra-Commerce. Losers include Chin Teck, Petronas Dagangan, DiGi and Tanjong plc.

On April 16, Wall Street traded lower then rallied due to better-than-expected profits from JP Morgan Chase and a drop in new US jobless claims boosted hopes for an economic rebound. JP Morgan announced a net profit of US$2.1 billion for the first quarter, raising hopes for a recovery in the troubled US banking sector.

US jobless claims fell by 8% to 610,000 in the past week, the third consecutive decline. This suggests some easing of pressure in the weak labour market.

However, US housing starts for March were much worse than expected, especially after a rebound in February. US home construction starts fell 10.8% in March and building permits fell to a record low.