ZLBT Morning Markets Round-up 23 Feb 2011

Malaysian Stocks May Follow-up Yesterdays' Losses

The Malaysian stock market on Tuesday wrote an emphatic finish to the five-day winning streak in which it had collected more than 35 points or 2.2 percent. The Kuala Lumpur Composite Index finished just below the 1,515-point plateau, and now traders are bracing for further damage when the market kicks off trade on Wednesday.The global forecast for the Asian markets remains broadly negative on mounting tensions in the Middle East. Airlines are expected to remain under pressure, along with properties, financials and steel companies. The European and U.S. markets finished well into negative territory, and the Asian markets are also expected to track to the downside.

The KLCI finished modestly lower on Tuesday, as losses from the financials, industrials and airlines were pared by gains from the plantation stocks.

For the day, the index shed 12.22 points or 0.81 percent to finish at 1,513.63 after trading between 1,510.18 and 1,519.14. Volume was 1.74 billion shares worth 2.02 billion ringgit.
Among the actives, AirAsia plunged 8 percent, while Malaysian Airline System shed 2.9 percent, TH Plantations added 3.7 percent and United Plantations collected 2.9 percent.

The lead from Wall Street is brutal, although it played catch-up on the negative momentum following Monday's holiday for President's Day. Stocks saw sharp losses on Tuesday, as uncertainty regarding the stability of key countries in the Middle East undermined upbeat sentiment regarding the U.S. economy. Traders received good news in the form of the strongest reading on consumer confidence in three years amid the ongoing chaos overseas.
 

In economic news, Malaysia will on Wednesday provide January numbers for consumer prices, with the inflation rate expected to come in at 2.4 percent - up from 2.2 percent in December.
Also, Malaysia's unemployment rate increased to 3.2 percent in December from 3.1 percent in the previous month, data released by the Department of Statistics showed Tuesday. The number of jobless persons increased 8.5 percent to 391,400 from 360,900 last month.
The number of employed persons grew 4.1 percent to 11.67 million in December from 11.21 million in the preceding month. Labor force participation advanced by 2.8 percentage points to 64.5 percent from 61.7 percent in November. At the same time, the number of labor force climbed to 12.06 million in December from 11.57 million in November.

WALL STREET : Indexes Tumble As Libyan Unrest Escalate

While U.S. investors enjoyed a long weekend honoring their past leaders, citizens in Libya were trying to dethrone theirs. According to the U.N., no fewer than 250 people have been killed amid escalating protests in the nation, which sits atop the largest oil reserves in Africa. The overseas drama got the bearish ball rolling this morning, fueling fears of contagion in the Middle East, and bolstering oil prices to their highest price in more than two years. Furthermore, the political turmoil boosted the CBOE Market Volatility Index (VIX) -- often known as the market's "fear gauge" -- to its loftiest level since late 2010. Elsewhere, Wal-Mart Stores (WMT) stoked the bearish flames, after the blue-chip conglomerate confessed to a seventh straight quarter of declining sales. The lackluster report helped to overshadow news of a stronger-than-anticipated rebound in consumer confidence, and contributed to the Dow Jones Industrial Average's worst single-session slump since Nov. 12.

The Dow Jones Industrial Average (DJIA – 12,212.79) blazed a steady path lower today, swallowing a loss of 178.5 points, or 1.4%, by the time the bell blissfully sounded. In fact, only oil concerns Chevron Corp. (CVX) and Exxon Mobil (XOM), as well as Kraft Foods (KFT), skirted the red, while Alcoa (AA) and JPMorgan Chase (JPM) led the bearish majority with losses of more than 4% apiece. While the blue chip barometer maintained its perch atop the 12,200 level, the index finished the session south of its 10-day trendline for the first time since Jan. 31.

In the same vein, the S&P 500 Index (SPX – 1,315.44) gave up 27.6 points, or 2.1%, by the close, marking its first settlement beneath its 10-day moving average in more than three weeks. Nevertheless, the SPX found a foothold in the form of its 20-day trendline, which hasn't been breached on a daily closing basis since Jan. 28. Finally, the Nasdaq Composite (COMP – 2,756.42) fared the worst of the three, giving up 77.5 points, or 2.7%, by the time the dust settled. In addition, the tech-rich index surrendered not only its 10-day and 20-day moving averages – which hasn't happened since late January – but also its footing atop the round-number 2,800 level.

Oil Prices Gush 8.6% On Disruption Worries

Crude futures skyrocketed today, as fatal protests against long-time Libyan leader Col. Muammar Gaddafi fueled fears of disrupted supplies.
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Already, Western oil companies have started to evacuate nonessential personnel from the nation, which not only sits atop the largest oil reserves in Africa, but is also a member of the Organization of Petroleum Exporting Countries (OPEC).
The escalating violence in Libya kept oil prices elevated near 2½-year highs. Most oil ports and refineries have shut down in Libya, the world’s 12th largest oil exporter, according to traders.

At the same time, international oil companies were evacuating their staff from the country in a move that executives and analysts said would probably lead to a sharp drop in oil output.

Against this backdrop – and thanks to concerns that protesters in Yemen and Bahrain could follow suit – March-dated crude soared $7.37, or 8.6%, to end its final session at $93.57 per barrel, marking the front-month contract's loftiest settlement since October 2008. The more actively traded April contract – which assumed front-month status after the close – added $5.71, or 6.4%, to end at $95.42 per barrel.

Gold Tops $1400 On Middle East, North African Turmoils

Gold futures also powered higher today, as the escalating violence in Libya bolstered the metal's safe-haven status. Furthermore, soaring oil prices amplified fears of rising global inflation, which heightened the malleable metal's appeal as a hedge against rising prices.

The revolt in Libya is the latest in a spate of political uprisings across the Mideast and North Africa in recent weeks. Fierce clashes between protesters and security forces in several cities have resulted in the deaths of at least 233 people, according to Human Rights Watch, which cited hospital sources in the North African nation.

Information about the situation in Libya was very difficult to verify, because of the severe restrictions on foreign media. Protesters are seeking an end to the decades-long regime of Moammar Gadhafi, whose son warned in a TV speech that Libya could be engulfed by civil war, according to reports.

“Investors are increasingly seeking a ‘safe haven’ again amid the growing unrest in the Mideast, Secondly, the price is being driven by speculative financial investors, who expanded their net long positions in gold by 9% last week," said a gold dealer.

By the close, gold for April delivery gained $12.50, or 0.9%, to end at $1,401.10 an ounce – the precious metal's best finish since Jan. 3.