ZLBT 's Morning Markets Round-up 16 Feb 2011

Malaysian Shares May Slide Back Below 1500 Points

Ahead of Tuesday's market holiday in observance of the birth of Muhammad, the Malaysian stock market halted the three-day losing streak in which it had declined more than 45 points or 3 percent. The Kuala Lumpur Composite Index finished just above the 1,505-point plateau, although now investors are anticipating renewed selling pressure at the opening of trade on Wednesday.

The global forecast for the Asian markets calls for mild declines as investors may look to lock in gains from a broadly based rally earlier in the week. Safe haven gold stocks are likely to provide support, although technology and property stocks may see consolidation. The European markets were mixed and the U.S. bourses ended lower - and the Asian markets are also expected to tick to the downside.

The KLCI finished modestly higher on Monday, thanks to support from the financial shares, industrial issues and plantation stocks.

For the day, the index added 10.81 points or 0.72 percent to finish at 1,505.33 after trading between 1,494.13 and 1,513.29. Volume was 1.978 billion shares worth 1.866 billion ringgit. There were 546 gainers and 268 decliners, with 285 stocks finishing unchanged.

Among the actives, Petronas Chemical, IOI Corporation, Genting and Tenaga all finished higher, while Axiata ended lower.

The lead from Wall Street is slightly soft as stocks ended moderately lower on Tuesday, with January retail sales growth that came in below expectations prompting traders to pocket some recent gains. Meanwhile, data on New York State manufacturing activity topped economist forecasts, limiting the pullback.

WALL STREET >>> Stocks Disappoint On Energy, Retail Data

Reports of rising prices, as well as relatively uninspiring economic data, sent stocks reeling right out of the gate this morning. On the home front, the Commerce Department said retail sales rose just 0.3% last month, marking the weakest increase since last summer, and falling short of economists' expectations for a 0.6% jump. Meanwhile, the government said U.S. import prices soared at nearly twice the expected rate in January, exacerbating inflationary concerns stemming from earlier reports out of China and the U.K. In the same vein, World Bank President Robert Zoellick said global food prices have hit "dangerous levels," rising 29% over the past year to hover just shy of an all-time peak. Against this backdrop – and thanks to a sector-wide slump among energy stocks and exchange operators – the bearish stars seemed to align, with all three major market indexes settling with both feet firmly in the red.

The Dow Jones Industrial Average (DJIA – 12,226.64) finished with a loss of 41.55 points, or 0.34%, as all but nine of its 30 components settled lower. Black-gold bigwig Exxon Mobil (XOM) paced the 21 decliners with a deficit of 2.3%, while Verizon Communications (VZ) led the bullish minority with a 1.6% gain. The shares of Pfizer (PFE), meanwhile, ended right where they started. Despite today's slide, the Dow maintained its foothold atop both the 12,200 level and its 10-day moving average – a trendline that hasn't been breached on a daily closing basis since Jan. 31.

In similar fashion, the S&P 500 Index (SPX – 1,328.01) gave up 4.31 points, or 0.32%, by the close, but remained perched atop its own 10-day trendline. Finally, the Nasdaq Composite (COMP – 2,804.35) fared the worst of the three, ending 12.83 points, or 0.46%, lower. Nevertheless, the tech-rich COMP maintained its spot atop round-number support at the 2,800 level.

Crude Futures Continue Retreat To 11-weeks Low; Chevron, Exxon Down

Crude futures continued their recent retreat today, despite lingering concerns about geopolitical tensions in the Middle East. Weighing on black gold was the strengthening greenback, which discouraged holders of foreign currencies from scooping up the dollar-denominated asset. Furthermore, a lackluster retail sales report fueled fears of ebbing demand. Against this backdrop, crude oil for March delivery gave up 49 cents, or 0.6%, to end at $84.32 per barrel – the front-month contract's lowest closing price since Nov. 30.

Meanwhile, shares of Chevron dipped 0.6% to $96.34. The oil major vowed to fight a ruling by a local court in Ecuador that it must pay $8.6 billion to clean up pollution in the rain forest. It’s believed to be the largest judgement in an environmental case, but still below the $20 billion BP PLC pledged last year to clean up the Deepwater Horizon oil spill in the Gulf of Mexico.

Among stocks in the spotlight, Exxon Mobil Corp. said Tuesday it added 3.5 billion barrels of oil equivalent to its proved reserves in 2010. Shares of Exxon Mobil fell 2.3% to $82.97.

Gold Futures Bolstered By Falling Markets @ 5-weeks High
Gold futures, meanwhile, advanced, as rising prices across the globe bolstered the precious metal's appeal as an inflationary hedge. In addition, unimpressive economic data and a broad-market decline in the equities market amplified gold's status as a "safe-haven" investment.

Gold buyers “seeing more political turmoil in Middle East [are] adding to gold positions.” Protests in Yemen and Bahrain grabbed headlines on Tuesday, after clashes Monday in Iran and days after Egyptian President Hosni Mubarak bowed to popular pressure and resigned. In addition to being jittery about the Middle East, investors were also piling up on gold at the expense of equities

By the close, April-dated gold futures added $9, or 0.7%, to settle at $1,374.10 an ounce – the commodity's loftiest finish since Jan. 13.

HAPPY TRADING