(RTTNews) - The Malaysian stock market has finished higher now in three straight sessions, gaining more than 45 points or 5 percent along the way. The Kuala Lumpur Composite Index now rests above 920 points, and investors are optimistic that the market could see additional gains at the opening of trade on Wednesday.

The global forecast calls for modest gains for the Asian markets, thanks to continued strength among the commodities and optimism over the coming administration of U.S. President-elect Barack Obama, which is now less than two weeks away. The European markets were broadly higher, and the U.S. markets saw more modest gains - and the Asian bourses are predicted to move to the upside as well.

The KLCI finished barely higher on Tuesday after sharp gains at the opening were erased by profit taking. The market was boosted by strong gains among the financial stocks, while the industrial issues and the plantations also saw significant gains.

For the day, the index added 1.57 points or 0.17 percent to close at 922.23. Volume was 765.429 million shares worth 1.084 billion ringgit. There were 291 decliners and 258 gainers, with 200 stocks finishing unchanged.

Among the actives, British American Tobacco, Loh & Loh, Nestle, KNM, Maybank, Bumiputra-Commerce and MISC all finished higher. Tenaga Nasional and Public Bank were unchanged, while UEM Land, Malaysian Resources Corporation, IOI Corporation and Sime Darby saw modest declines.

The lead from Wall Street is cautiously optimistic as stocks saw some volatility over the course of the session before ending Tuesday’s trading firmly in positive territory, although well off their highs. The choppy trading came as investors responded to a mixed bag of economic news and remarks by Obama.

On the economic front, reports on service sector activity, factory orders, and pending home sales painted a mixed picture of the economy. The Institute for Supply Management said that its index of activity in the service sector rose to 40.6 in December from a record low of 37.3 in November, although a reading below 50 still indicates a contraction in the sector. Economists had expected the index to edge down to 37.0.

At the same time, the government issued its report on November factory orders, showing a decline of 4.6 percent following a revised 6.0 percent decrease in October. Factory orders were expected to decline 2.6 percent in November. Similarly, weakness was also seen in the pending home sales report that was released by the National Association of Realtors. Pending home sales fell by 4.0 percent to a record low in November, while analysts had expected pending sales to fall by a more modest 1.0 percent.

In other news, President-elect Barack Obama said Tuesday that he expects to inherit a $1 trillion federal deficit, a burden that will likely extend into the next few years. Subsequently, Obama said he and his team want to instill a “sense of responsibility” about future budget choices. That “sense of responsibility” includes a ban on all earmarks from the economic stimulus package he hopes to sign soon after he takes office on January 20th. The president-elect met with both Democrat and Republican lawmakers Monday to discuss his proposed package, aiming at a swift passage following his inauguration.

Meanwhile, the forecast from members of the Federal Open Market Committee deteriorated significantly in the period between their October and December meetings, the minutes from the FOMC’s December meeting revealed. The policy-making arm of the Federal Reserve is expecting economic weakness to extend throughout 2009, a bleak outlook that prompted them to slash the federal funds rate to record low levels.

By the close of trading, the major averages were well off their best levels of the day, but they held onto strong gains. The Dow closed up 62.21 points or 0.7 percent at 9,015.10, the Nasdaq closed up 24.35 points or 1.5 percent at 1,652.38 and the S&P 500 closed up 7.25 points or 0.8 percent at 934.70.

In economic news, Malaysia will announce November numbers for imports, exports and trade balance on Wednesday. Imports are expected to contract by 3.8 percent on year following the 5.3 percent annual decline in the previous month. Exports are projected to fall 5.7 percent on year after a 2.6 percent annual decline a month earlier. The trade balance is expected to show a surplus of 8.96 billion ringgit, down from the 9.62 billion ringgit surplus in the previous month.

For comments and feedback: contact editorial@rttnews.com

Copyright(c) 2009 RealTimeTraders.com, Inc. All Rights Reserved

Posted in Categories: Eurozone, Releases, Stocks, UK, USA.

Subscribe by RSS Subscribe by Email