KUALA LUMPUR: The clouds of gloom drifted over Asian markets despite Wall Street’s decent showing in overnight trade on Jan 25 with the Dow Jones Industrial Average up 0.23% and the broader S&P 500 Index gaining 0.46%.

The FBM KLCI lost 13.77 points or 1.06% to 1,283.02 on Jan 26, while key regional markets plunged between 1.78% and 2.54%, weighed down by the same factors as the day before — of continuing monetary tightening in China, US President Barack Obama’s proposal to bar US banks from proprietary trading and a strengthening US dollar.

“Although the factors weighing down the regional markets were the same as Jan 25’s, the regional selldown was worse than what we expected. This indicates that investors are more concerned about the issues in the region than we previously thought,” said a Kuala Lumpur-based technical analyst.

Major Asian market indices returned all their gains made in the recent rally at the start of the year and were in negative territory, year to date. Japan’s Nikkei 225 closed 1.78% lower at 10,325.28 and was down 2.10% from the start of the year.

Among the worst performers on Jan 26 were Hong Kong’s Hang Seng Index which fell 2.38% to 20,109.33, down 8.06% for the year while China’s Shanghai Composite Index gave up 2.42% to 3,019.39, down 7.86% year-to-date.

Singapore’s Straits Times Index lost 2.54% to 2,740.33, losing 5.43% year-to-date, while India’s Sensex 30 Index was 0.47% lower at 16,780.46 points, down 3.92% for the year.

The Federal Reserve Open Market Committee (FOMC) meeting on Jan 26 and tonight, which will lead to a policy announcement at the end, could also be keeping investors on the sidelines.

“What we are hearing are concerns of more hawkish statements from the US regarding the potential of a rate hike. Investors will wait for a clearer picture of what the US will do.

“If sentiment is negative from the comments, then we will see a further selldown. If not, then it would still be negative but we might see a very mild rebound,” the technical analyst said.

He reckoned that on Jan 26’s regional equities selldown was “a bit damaging” and it would be difficult for the domestic and regional markets to resume their previous upward trend.

He noted that the FBM KLCI was still holding above the 1,278-point support level, but all other indicators pointed to a negative trend.

Citi Investment Research in a fund flow report released on Jan 26 said the weakness in Hong Kong’s financial stocks dragged the territory’s market lower. “If Asian funds re-position for a strong dollar, Hong Kong diversified financials would likely be most vulnerable as they are well-owned,” Citi said in the report.

On the Malaysian market on Jan 26, losers outnumbered gainers by 4.7 to one, while volume was a healthy 1.25 billion shares. Top gainers included Tomypak Holdings Bhd which rose 35 sen to RM2.63, AEON Bhd surged 30 sen at RM5.50 and Perduren (M) Bhd up 28 sen to RM1.82.

Top losers included Hartalega Holdings Bhd which lost 44 sen to RM7.33, Supermax Corp Bhd shed 42 sen to RM5.20 and MISC-foreign slipped 37 sen to RM8.13.

Most active stocks for the day included Talam Corp Bhd which fell one sen to 12 sen, Integrated Rubber Corp Bhd slipped 13 sen to RM1.38 and KNM Group Bhd three sen down to 73.5 sen.