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Friday, November 12, 2010

ZLBT's Morning Markets Round-up

Malaysian Stocks May Extend Losses;
A Cisco Misco 4 DJIA
The Malaysian stock market on Thursday halted the five-day winning streak in which it had gathered more than 20 points or 1.2 percent en route to another fresh record closing high. The Kuala Lumpur Composite Index finished just below the 1,515-point plateau, and now analysts are forecast further weakness when the market kicks off trade on Friday.

The global forecast for the Asian markets is broadly negative, with profit taking expected among some of the overbought bourses. Technology stocks and financials are expected to decline, with energy stocks providing a bit of support.
The European and U.S. markets finished firmly lower, and the Asian markets are expected to follow suit.The KLCI finished sharply lower on Thursday as investors locked in gains following the recent rally. Financials and plantations led the market's decline.

For the day, the index shed 14.31 points or 0.94 percent to finish at the daily low of 1,513.70 after peaking at 1,527.42. Volume was 1.58 billion million shares worth 2.28 billion ringgit. There were 447 decliners and 381 gainers, with 287 stocks finishing unchanged.Among the decliners, Maybank, PPB, Tenaga, DiGi.com, YTL Power and Sime Darby all finished lower.

In economic news, Malaysia's central bank will on Friday conclude its monetary policy meeting and release its policy statement. The bank also will announce its decision on interest rates, with analysts widely expecting it to hold steady at the current 2.75 percent.

Cisco Bleak Forcaste Rattle Wall Street. Dow Down 0.65%
Tech bellwether Cisco Systems (CSCO) set the bearish tone today, after the firm disappointed Wall Street with its surprisingly bleak revenue forecast. Late Wednesday, Cisco warned that it expects 3% to 5% revenue growth for the fiscal second quarter, well below Wall Street's expectation for a 13% improvement. CEO John Chambers seemed as shocked as anyone by the dismal guidance. "We hit a couple of air pockets," he said on a conference call with analysts. "We wish we'd seen them coming." So did CSCO shareholders, no doubt, with the stock swallowing a 16.2% loss by the close -- a gut-churning drop that weighed on both the Dow Jones Industrial Average and the tech-heavy Nasdaq Composite.

The lead from Wall Street is negative as stocks saw considerable weakness on Thursday, with traders reacting to disappointing guidance from technology bellwether Cisco Systems (CSCO). The major averages all ended the day firmly in negative territory, pulling back further off their recent highs.The selling followed a weaker than expected forecast from Cisco, which offset some of the recent economic optimism and inspired traders to cash in. After the close of trading on Wednesday, Cisco reported better than expected first quarter earnings, but it also forecast weaker than expected second quarter and full year revenue growth. The networking giant said it expects revenues to rise 3 to 5 percent for the quarter and 9 to 12 percent for the year.

The Dow Jones Industrial Average (DJIA – 11,283.10) settled on a deficit of 73.9 points, or 0.7%, as 20 of its 30 components closed lower. Cisco led the decliners, as you might imagine, while oil major Chevron (CVX) led the nine advancing blue chips into the black. Meanwhile, DuPont (DD) ended flat. Thanks to the Dow's 1.4% slump this week, the index ended the session beneath its 10-day moving average for the first time since Oct. 29.

The S&P 500 Index (SPX – 1,213.54) shed just 5.2 points, or 0.4%, with the index maintaining a perch above its own 10-day trendline. Finally, the Nasdaq Composite (COMP – 2,555.52) suffered the day's largest percentage loss, giving up 23.3 points, or 0.9%. The COMP spent most of the session staring up at its 10-day moving average, but bounced back to manage a daily finish above this short-term support.

The weakness in the markets also came as traders kept an eye on the G20 summit of world leaders in South Korea amid concerns that divisions regarding currency valuations could prevent the leaders from reaching a broad agreement on global economic cooperation.

Crude futures briefly set a new 25-month peak of $88.63 today, buoyed by data showing record-setting demand in China. The world's No. 2 oil consumer burned through 8.92 million barrels per day in October, as industrial production in the country soared 13.1%. Meanwhile, the Organization of Petroleum Exporting Countries (OPEC) raised its forecast for world oil demand by 310,000 barrels per day, stoking further optimism in the oil patch. However, strength in the U.S. dollar ultimately limited black gold's gains. Crude oil for December delivery ended the day right where it started, unchanged at $87.81 per barrel.

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