Market Review : DJIA AND FBM KLCI

Market Recap: DJIA Pares Triple-Digit Drop, Despite Bleak Payrolls Data

 

It was a rude awakening on Wall Street this morning, as the Labor Department's nonfarm payrolls report fell woefully short of consensus expectations. Many economists were expecting a six-digit rise, but the U.S. economy added just 18,000 jobs in June. Even worse, the unemployment rate rose to 9.2%, and payrolls for April and May were downwardly revised by 44,000. Not surprisingly, Democrats and Republicans both found a way to twist the disappointing data to their liking. Rep. Eric Cantor, the Republican from Virginia, argued that the weak jobs market should discourage Congress from raising taxes to address its debt crisis -- but Sen. Harry Reid, the Democrat from Nevada, took the opportunity to reiterate the case for greater tax contributions from the wealthy. And, just in case anyone was still hoping for a speedy resolution on the debt ceiling debate, House Speaker John Boehner clarified, "It's not like there's some imminent deal about to happen." In the face of downbeat jobs data and continuing debt uncertainty, the major market indexes spent the day swimming in red ink -- but stocks showed surprising resilience, paring the bulk of their losses by the close.

 

The Dow Jones Industrial Average (DJIA – 12,657.20) was down 152 points at its intraday nadir, but settled for a smaller decline of 62.3 points, or 0.5%. In fact, the Dow ended its third straight session north of 12,600, and actually notched its highest weekly close since April 29. Only six of the blue-chip barometer's 30 components closed higher, led by Merck (MRK), while Bank of America (BAC) set the pace for the 24 declining Dow members. For the week, the index eked out a gain of 0.6%.

 

After finding intraday support at 1,333 -- double its March 2009 low -- the S&P 500 Index (SPX – 1,343.80) whittled its daily deficit to just 9.4 points, or 0.7%. The Nasdaq Composite (COMP – 2,859.81), meanwhile, wrapped up the day with a loss of 12.9 points, or 0.5%. The SPX tacked on 0.3% for the week, while the COMP sailed 1.6% higher.

 

 

 Malaysia Stocks Tipped To Rebound On Friday

 

The Malaysian stock market headed barely back to the downside again on Thursday, one session after it had ended the two-day losing streak in which it had fallen just over 1 point. The Kuala Lumpur Composite Index remained just above the 1,590-point plateau, and now investors are expecting renewed support at the opening of trade on Friday.

 

The global forecast for the Asian markets is broadly positive following much better than expected economic data out of the United States. Technology stocks are likely to fuel the rally, along with retail, steel, finance and oil companies - although some money may be taken off the table ahead of Friday's U.S. jobs report. The European and U.S. markets finished firmly in the green, and the Asian bourses are expected to follow that lead.

 

The KLCI finished flat on Thursday as gains from the financial shares were erased by losses from the plantation stocks and industrials.

 

For the day, the index eased 1.10 points or 0.07 percent to finish at 1,590.24 after trading between 1,587.88 and 1,595.87. Volume was 1.27 billion shares worth 2.07 billion ringgit. There were 368 gainers and 355 decliners, with 355 stocks finishing unchanged.

 

Among the actives, Sime Darby, Time Engineering, Time.Com, DiGi.Com, Alliance Financial, Maybank and CIMB Group all finished higher, while Petronas Chemical was unchanged and Axiata ended lower.

 

In economic news, Malaysia's central bank on Thursday unexpectedly left its benchmark interest rate unchanged. Instead, it demanded banks to set aside more funds as reserves to absorb excess liquidity for the third time this year. Bank Negara Malaysia maintained the Overnight Policy Rate at 3 percent. In order to manage liquidity, it raised the Statutory Reserve Requirement ratio to 4 percent from 3 percent, with effect from July 16.