The local stock market traded flat today as a lack of fresh leads from a flat overnight performance on Wall Street led investors to lock in gains from yesterday’s rally.

Global equity markets are alternating between gains and losses, almost on a daily basis. This continuing tug of war between investor optimism and pessimism will likely continue for some time as long as economic data remains mixed and external problems linger.   

The recent hike in the US Federal Reserve’s discount rate, for instance, earlier spooked investors last Friday, fearing it marked the start of a monetary tightening cycle. However, markets subsequently rallied yesterday amid hopes that the move suggests an improving economic outlook instead.

External events – ranging from the US rate hike, volatility on Wall Street, lingering debt problems in Europe and concerns over further credit tightening in China – have also largely overshadowed the current earnings season.

With the earnings season now at the tail-end, hopefully there will be some fresh domestic leads for investors. The release of Malaysia’s 4Q2009 GDP numbers will also provide some leads.

For now though, many investors appear to prefer sitting on the sidelines, judging by the low trading volumes. This is perhaps understandable given the number of external uncertainties and the large gains in stock prices since the rally started in March 2009.

The FBM KLCI started in negative territory today but ended the day unchanged, at 1,266.4. Market breadth was positive, with advancing stocks beating declining ones by a three-to-twomargin. Trading volume remained low with just 664 million shares changing hands.

Volume leaders include Compugates, Talam, KNM, SAAG, Axiata, AirAsia and Maxis. Top gainers include Hai-O, Coastal, MAS, Kulim, Tanjong plc, KL Kepong and Supermax. Losers include Haisan, Prolexus and Ireka, but on small volume.