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Categories
| Sharp rebound |
| Business & Market 2009 | |||
| Written by Doreen Leong | |||
| Monday, 04 May 2009 00:00 | |||
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The KLCI surged 23.3 points to finish the week at 990.7 points last Thursday. This was only 1.94 points lower than its six-month high of 992.68 points registered at market close the previous Friday. This makes April the best performing month so far this year, with the KLCI chalking up a month-on-month gain of 13.5%. Earlier in the week, the global markets were hit by fears of a swine flu outbreak, which is believed to have claimed 159 lives. Governments and health officials around the world have taken steps to contain the disease that started in Mexico and has spread to the US, Europe and possibly Asia. Concerns that the outbreak of the swine flu might be severe sent the KLCI to a low of 965.7 early last week. Last Wednesday, the World Health Organization raised its alert level to Phase 5, the next-to-highest level in the worldwide warning system, as the global spread of the disease is highly likely. However, the higher closing on Wall Street on Thursday, thanks to the better-than-expected rise in the US Consumer Confidence Index in April, boosted sentiment on Bursa Malaysia. The improved consumer confidence has raised hopes that private consumption, which accounts for more than two-thirds of the US economy, is set to recover after falling sharply in the last few months of 2008. Analysts say investor confidence strengthened after Wall Street finished sharply higher overnight. “Although the US reported a larger-than-expected 1Q2009 GDP contraction of 6.1%, investors were buoyed by evidence of a revival in US consumer spending. A recent survey also indicated that consumer confidence spiked in April. This has fuelled hopes that personal consumption will lead the US — and the rest of the world — out of the current recession,” says Insider Asia in a report. The research house says markets are shrugging off dismal economic figures and clinging to the more upbeat ones for signs that the global recession is abating. US stocks climbed last Wednesday after grim growth data offered hints of future expansion, a prospect reinforced by the Federal Reserve’s hopeful comments. Last Wednesday, Bank Negara Malaysia maintained the overnight policy rate at 2% at its monetary policy committee meeting but said the economy was expected to record a marked contraction in 1Q2009. It said adverse global developments had resulted in steep declines in the country’s exports and industrial production, which had in turn affected private sector activity and labour market conditions. Some analysts say investors should remain cautious because US consumer spending is unlikely to return to pre-crisis levels anytime soon although confidence appears to be on the mend. Also, US household debt levels remain high amid deteriorating income prospects. On the home front, a technical chartist pegs the immediate support level for the KLCI this week at 942 points and its resistance level at 978 to 997 points. This article appeared in the Capital page, The Edge Malaysia, Issue 753, May 4-10, 2009.
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