The Malaysia stock market has closed lower now in back-to-back sessions, although it has eased just 4 points or 0.25 percent in that span. The Kuala Lumpur Composite Index finished just below the 1,650-point plateau, and now analysts are forecasting a mild rebound at the opening of trade on Monday.
The global forecast for the Asian markets suggests bargain hunting after heavy damage last week, thanks to encouraging reports from the European Central bank and the U.S. Federal Reserve. The European and U.S. markets finished firmly higher on Friday, and the Asian bourses are expected to open in similar fashion.
The KLCI finished slightly lower on Friday following losses from the financial shares, industrial issues and plantation stocks.
For the day, the index eased 3.39 points or 0.21 percent to finish at 1,648.22 after trading between 1,647.90 and 1,654.66. Volume was 1.28 billion shares worth 1.189 billion ringgit. There were 434 decliners and 322 gainers, with 331 stocks finishing unchanged.
Among the actives, Maybank and Nextnation Communication finished lower, while Petronas Chemicals was unchanged and JCY International, Sime Darby and CIMB Group ended higher.
The lead from Wall Street is positive as stocks showed a substantial turnaround on Friday after moving lower in early trading. The markets benefited from a positive reaction to the latest reports regarding the world's central banks, which indicated that the European Central Bank is considering setting yield band targets under a new bond-buying program.
Setting a band is an option gaining in favor among central bankers, but the decision would not be made before the ECB's next monetary policy meeting on September 6.
Buying interest was also generated by news of a letter Federal Reserve Chairman Ben Bernanke sent to Rep. Darrell Issa, R-Calif., defending the Fed's actions to support the economy. In the letter, which was obtained by the Wall Street Journal, Bernanke also told Issa there is "scope for further action by the Federal Reserve to ease financial conditions and strengthen the recovery."
The early weakness followed the Commerce Department's report on durable goods orders in of July. While the report showed a much bigger than expected increase in durable goods orders, the increase was largely due to strength in the volatile transportation sector. The report also showed a continued decrease by a key indicator of business spending.
Traders also remained leery about the situation in Europe, where Greek Prime Minister Antonis Samaras held a meeting with Chancellor Angela Merkel. Samaras pledged that Greece will "stick to its commitments and fulfill its obligations" but noted that the debt-plagued nation needs "time to breathe" as it undertakes crucial reforms. Merkel did not immediately respond to the request for more time to implement reforms but stressed that Germany wants to help Greece remain in the eurozone.
The major U.S. averages moved roughly sideways going into the close, ending the Friday firmly in positive territory. The Dow jumped 100.51 points or 0.8 percent to finish at 13,157.97, while the NASDAQ rose 16.39 points or 0.5 percent to end at 3,069.79 and the S&P 500 advanced 9.05 points or 0.7 percent to close at 1,411.13. Despite the gains on the day, the major averages all moved lower for the week. The Dow fell by 0.9 percent, while the NASDAQ and the S&P 500 slid by 0.2 percent and 0.5 percent, respectively.
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