ZLBT Morning Views : Soft Start Tipped For Malaysian Stocks

Bursa Malaysia Seeking Fresh Leads

The Malaysian stock market has finished lower in three straight sessions, falling just 7 points or 0.5 percent in that span. The Kuala Lumpur Composite Index finished just below the 1,530-point plateau, and now analysts are forecasting continued weakness when the market kicks off trade on Thursday.

The global forecast for the Asian markets is broadly negative on disappointing economic data and earnings news. Steel stocks figure to lead the markets lower, along with oil companies, technology shares and financials. The European and U.S. markets ended firmly in the red, and the Asian markets are also expected to track to the downside.

The KLCI finished slightly lower again on Wednesday as softness from the financial shares was offset by gains from the plantation stocks.

For the day, the index shed 3.04 points or 0.20 percent to finish at 1,528.43 after trading between 1,519.77 and 1,537.71. Volume was 1.262 billion shares worth 1.51 billion ringgit. There were 653 decliners and 163 gainers, with 264 stocks finishing unchanged.

Among the gainers, Genting Plantations, Tenaga Nasional, AMMB Holdings, CIMB Group and Telekom Malaysia all finished higher.

In economic news, The Malaysian central bank will on Thursday conclude its monetary policy meeting and then announce its decision on interest rates. Analysts are split on the forecast, with some expecting the bank to keep rates on hold at 2.75 percent and others anticipating a hike of 25 basis points to 3.0 percent. 

Wall Street >>> Payroll Data Sent Dow Spiralling

The lead from Wall Street suggests consolidation as stocks showed a notable move to the downside on Wednesday, with traders reacting negatively to a disappointing batch of U.S. economic data. The markets pulled back further off their recent highs ahead of Friday's closely watched jobs report.

Stocks under pressure following the release of a report from the Institute for Supply Management showing a substantial slowdown in the pace of service sector growth in the month of April. The ISM said its non-manufacturing index fell to 52.8 in April from 57.3 in March, although a reading above 50 indicates continued growth in the service sector. Economists had expected a much more modest decrease to a reading of 57.0. With the drop, the non-manufacturing index fell to its lowest level since a matching reaching in August of 2010.

The major averages ended the session well off their worst levels of the day but still closed firmly in negative territory. The Dow fell 83.93 points or 0.7 percent to 12,723.58, the NASDAQ slipped 13.39 points or 0.5 percent to 2,828.23 and the S&P 500 dropped 9.30 points or 0.7 percent to 1,347.32.

Earlier in the day, payroll processor Automatic Data Processing (ADP) released a separate report showing a slowdown in pace of private sector job growth in April. ADP said non-farm private employment increased by 179,000 jobs in April following an upwardly revised increase of 207,000 jobs in March. Economists had expected an increase of about 200,000 jobs. The weaker than expected private sector job growth generated some uncertainty about the Labor Department's monthly report, which includes government jobs. The report is expected to show an increase of about 185,000 jobs in April.

On the earnings front, Kellogg (K) fell by 1.2 percent after reporting first quarter earnings that fell to $1 per share, coming in below estimates for earnings of $1.04 per share. At the same time, the food maker said its net sales rose 5 percent to $3.5 billion, above estimates for $3.4 billion. Time Warner (TWX) also closed in the red despite reporting first quarter earnings that came in slightly above analyst estimates. The company also reported stronger than expected revenue growth.

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