ZLBT Morning Markets Round-up 18 Feb 2011

Muted Movements Predicted For KL Stocks

The Malaysian stock market has finished higher now in three straight sessions, collecting more than 15 points or 1 percent in the process. The Kuala Lumpur Composite Index finished just below the 1,510-point plateau, and now analysts are expecting the market to hold steady in that neighborhood when it opens on Friday.
The global forecast for the Asian markets is mixed with a touch of upside following conflicting economic data from the United States. Oil stocks are likely to provide support, as are the properties and steel companies - while financials and technology stocks may see mild selling. The European markets finished mixed and the U.S. bourses ended slightly higher, and the Asian markets are tipped to split the difference.

The KLCI finished slightly higher on Thursday, nudged into the green by gains from the financials and industrials - although selling from the plantation stocks limited the upside.

In economic news, Malaysia is on Friday scheduled to release gross domestic product numbers for the fourth quarter of 2010. GDP is expected to rise 4.4 percent on year following the 5.3 percent annual expansion in the third quarter.

The lead from Wall Street is cautiously optimistic as stocks were able to record modest gains on Thursday, with the strongest reading out of the Philadelphia-area manufacturing sector in seven years helping to overshadow another lackluster jobs report and consumer price data showing shades of inflation.

DJIA Defeats 12,300 on Bargain Hunting, Energy Rally >>> It was a rough start on the Street today, as traders scoffed at a larger-than-anticipated increase in first-time unemployment filings. In addition, the Commerce Department said consumer prices rose at their fastest pace in more than a year last month, intensifying widespread inflationary concerns. Nevertheless, investors eventually reached for their rose-colored glasses, as broad-market bargain hunters stepped in around midday. Furthermore, a healthy reading on Philadelphia-area manufacturing activity helped to fan the bullish flames, while escalating geopolitical tensions in the Middle East bolstered energy-related equities. Against this backdrop, stocks spent the afternoon blazing a path into the black, with all three major market indexes exploring new-high territory by the bell.
The Dow Jones Industrial Average (DJIA – 12,318.14) found itself flirting with a 30-point deficit in early trading, but eventually reversed course to tag a new two-plus-year high of 12,331.31. By the close, the blue chip barometer tacked on nearly 30 points, or 0.2%, to finish north of the 12,300 level for the first time since June 13, 2008. Twenty of the Dow's 30 components ended higher, led by Coca-Cola Co. (KO) and DuPont (DD), while American Express (AXP) paced the nine decliners with a loss of more than 2.3%. The session was a wash, however, for The Walt Disney Company (DIS), which ended at breakeven.

Meanwhile, the S&P 500 Index (SPX – 1,340.43) settled just a stone's throw from its new multi-year acme of 1,341.50, advancing 4.1 points, or 0.3%, to end atop the 1,340 level for the first session since June 19, 2008. Finally, the Nasdaq Composite (COMP – 2,831.58) rallied as high as 2,835.20 – a level not explored since November 2007 – before settling on a slightly slimmer gain of 6 points, or 0.2%.

TECHNICAL ANALYSIS : Dow Jones Industrial Average 18/02/2011  >>> The Dow closed higher on Thursday and above weekly resistance crossing at 12,289 as it extends this winter's rally. The high-range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near-term. If the Dow extends this winter's rally, the January 2008 high on the weekly continuation chart crossing at 12,767 is the next upside target. Closes below the 20-day moving average crossing at 12,099 are needed to confirm that a short-term top has been posted. First resistance is today's high crossing at 12,324. Second resistance is the January 2008 high on the weekly continuation chart crossing at 12,767. First support is the 10-day moving average crossing at 12,232. Second support is the 20-day moving average crossing at 12,099.

Crude Futures Rises On Heightened Bahrain Tensions

Crude futures finished at their loftiest level in a week today, as lingering geopolitical tensions in the Middle East continued to fuel supply concerns. More specifically, a fatal clash between police and protesters in Bahrain, as well as expectations for a massive antigovernment protest in the country's capital tomorrow, exacerbated jitters stemming from reports of two Iranian warships en route to the Suez Canal. Against this backdrop – and thanks, in part, to a weaker dollar – March-dated crude oil futures added $1.37, or 1.6%, to end at $86.36 per barrel.

Gold Glitters At 5-week High >>> Gold futures also benefited from unrest in the Middle East, which – along with discouraging jobless data – bolstered safe-haven demand for the malleable metal. In addition, reports of rising consumer prices heightened gold's appeal as an inflationary hedge. As a result, gold for April delivery tacked on $10, or 0.7%, to settle at $1,385.10 an ounce – the front-month contract's best finish since Jan. 13. Elsewhere in the metals markets, March-dated silver futures touched a new 31-year high of $31.57 a troy ounce.

HAPPY TRADING