The Malaysia stock market gave up just a handful of points on Thursday - but that was enough to halt the four-day winning streak in which it had gathered more than 35 points or 2.3 percent. The Kuala Lumpur Composite Index settled just above the 1,600-point plateau, and now analysts are forecasting further contraction at the opening of trade on Friday.
The global forecast for the Asian markets remains soft on disappointing economic data from around the globe. China's manufacturing sector performance continued to worsen with the factory activity entering an eighth month of contraction in June. Spain's borrowing costs climbed again at a debt auction on Thursday despite rising demand. In the United States, existing home sales fell more than expected, and Moody's downgraded 14 of the world's largest banks. The European and U.S. markets were sharply lower, and the Asian bourses are tipped to follow suit.
The KLCI finished slightly lower on Thursday as losses from the financial shares were erased by gains from the industrial issues and plantation stocks.
For the day, the index eased 2.96 points or 0.18 percent to finish at 1,601.43 after trading between 1,599.75 and 1,607.31. Volume was 1.572 billion shares worth 1.577 billion ringgit. There were 424 decliners and 354 gainers, with 316 stocks finishing unchanged.
Among the actives, CIMB Group, Sime Darby and Luster Industries all finished higher, while Maybank and Ariantec Global ended lower.
The lead from Wall Street is broadly negative as stocks moved sharply lower on Thursday after showing a lack of direction early in the session. A batch of disappointing U.S. economic data inspired traders to cash in on the gains from the past two weeks.
The sell-off followed a National Association of Realtors report showing that existing home sales fell by 1.5 percent to a seasonally adjusted annual rate of 4.55 million in May from 4.62 million in April. Economists had expected a slightly more modest decrease to an annual rate of 4.57 million.
A separate report from the Philadelphia Federal Reserve showed that its diffusion index of current activity fell to a negative 16.6 in June from a negative 5.8 in May, with a negative reading indicating a contraction in regional manufacturing activity.
Additionally, the Labor Department's report on initial jobless claims in the week ended June 16 showed that claims fell modestly but still beat estimates.
The release of the disappointing data came on the heels of the Federal Reserve's announcement Wednesday of the extension of its "Operation Twist" program until the end of the year. Fed Chairman Ben Bernanke also noted that the central bank is prepared to take additional steps to prop up the sluggish economy.
Among individual stocks, shares of Bed Bath & Beyond (BBBY) tumbled 17 percent after the home furnishings retailer reported better than expected first quarter earnings but provided disappointing guidance. With the loss, Bed Bath & Beyond fell to a three-month closing low.
The major averages saw further downside going into the close, ending the session just off their worst levels of the day. The Dow plunged 250.82 points or 2 percent to finish at 12,573.57, while the NASDAQ tumbled 71.36 points or 2.4 percent to end at 2,859.09 and the S&P 500 plunged 30.18 points or 2.2 percent to 1,325.51.
In economic news, Malaysia will on Friday provide May figures for its corporate price index; inflation was up 1.9 percent on year and was flat on month in April.
Also, Malaysia's seasonally adjusted unemployment rate increased to 3 percent in April from 2.8 percent in March, the Department of Statistics said on Thursday. The number of unemployed persons in the country increased to around 383,900 in April from about 380,400 in the previous month.
At the same time, the number of persons in employment remained broadly unchanged at about 12.54 million in April. The labor force participation rate was 65.3 percent during the month, unchanged on previous month.
by RTT Staff Writer
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