Bursa likely to consolidate this week

BURSA Malaysia is expected to consolidate this week as investors price in the probability of a US interest rate hike from the Federal Open Market Committee (FOMC) meeting scheduled for March.

Affin Hwang Investment Bank vice-president and head of retail research Datuk Nazri Khan said investors are forecasting four interest rate hikes for the year, although the FOMC meeting held this week, left the interest rate unchanged.

“The day of low interest rates has ended and Bank Negara has also revised the overnight policy rate.The US is also expected to do the same, especially with inflation anticipated to rise this year,” he told Bernama.

This week, he said, the benchmark FBM KLCI would likely be at the 1,860-level.

Commenting on the stocks, Nazri Khan said banking stocks would receive a spillover effect, as the local banking industry’s loan growth is expected to rise by 4%.

For the week just-ended, Bursa Malaysia traded mixed, reflecting its Asian peers.

Bursa Malaysia was closed last Wednesday and Thursday for the Thaipusam and Federal Territories Day holidays respectively.

On a Friday-to-Friday basis, the FBM KLCI rose 16.56 points to end the week at 1,870.48.

The FBM Emas Index added 2.08 points to 13,376.58 and the FBMT 100 Index increased 25.0 points to 13,071.72.

FBM Emas Shariah Index gained 605.10 points to 13,651.82.The FBM 70 was down 274.98 points to 16,468.18 and the FBM Ace KUALA LUMPUR

The three-month Kuala Lumpur Interbank Offered Rate (Klibor) futures contract on Bursa Malaysia Derivatives is expected to remain quiet this week as investors continued to look for market catalysts.

A dealer said the market might look to external factors to drive the movement in the local market.

He said among the possible market movers is US jobs data that could give some insight into the timing of an interest rate hike in the world’s largest economy. NEW YORK

After its best January since 2006, the oil market wrapped up the week on a slump as a stronger dollar and weaker stocks added to concerns over booming shale production.

Futures slipped 0.5% in New York last Friday, with oil inversely tracking the US dollar and American equities headed for the worst week in two years.

A stronger greenback reduces the appeal of raw materials as an investment. At the same time, worries over higher shale production added to the downward price momentum.

“The strong jobs report is certainly upping expectations for Fed rate hikes and that’s causing a little strength in the dollar, but is certainly causing some softness in the equity market,” Rob Haworth, who helps oversee US$150bil in assets at US Bank Wealth Management in Seattle, said by telephone.

“You are seeing a bit of a risk-off day that’s actually bleeding into the oil market.”

Crude in New York lingers near US$65 a barrel, threatening to bring a flood of US shale to the market.

A bigger production surge is likelier than most expect, Ed Morse, global head of commodities research at Citigroup Inc., said in a Bloomberg Television interview.

Drilling in the US intensified for a second week, with six oil rigs added, according to Baker Hughes data last Friday.

West Texas Intermediate for March delivery dropped 35 cents to settle at US$65.45 a barrel on the New York Mercantile Exchange. Prices posted a 1% decline this week.

Brent for April settlement fell US$1.07 to end the session at US$68.58 a barrel. The global benchmark crude closed at a premium of US$3.51 to April WTI, the smallest . 0 . fell 177.80 points to 6,496.13.

On a sectoral basis, the Finance Index surged 308.21 points to 17,979.58, the Plantation Index slid 24.81 points to 8,056.40 and the Industrial Index fell 10.80 points to 3,387.41.

Total turnover slipped to 6.52 billion units valued at RM6.15bil from 17.38 billion units valued at RM12.98bil previous week.

The Main Market narrowed to 5.63 billion units worth RM8.11bil from 11.21 billion units valued at RM11.77bil.

Warrants turnover fell to 1.61 billion units valued at RM243mil from 3.35 billion units worth at RM1.40bil.

The Ace Market narrowed to 1.60 billion units worth RM275.57mil from 2.45 billion shares valued at RM628.96mil. – Bernama

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since August.

The S&P 500 Energy Index tumbled almost 4.7%, with Exxon Mobil Corp., Chevron Corp. and Hess Corp. all dropping more than 5%.

The dollar rose after US payrolls and average hourly earnings beat estimates and prior results were revised higher.

The Bloomberg Dollar Spot Index added as much as 1%.

US output surged above 10 million barrels a day for the first time in more than four decades in November, the Energy Information Administration reported earlier this week.

Weekly production is also at a recordhigh level.

Oil has been tracking the dollar all week “and all of a sudden, oil prices are under pressure,” said Gene McGillian, a market research manager at Tradition Energy in Stamford, Connecticut, in a telephone interview.

Meanwhile, “in the back of traders’ minds is the data that came out that showed US crude production jumped above 10 million barrels a day back in November.”

Gasoline futures dropped 1.3% to settle at US$1.8720 a gallon, the lowest level in two weeks.

Hedge funds cut their bullish ICE Brent crude oil bets by the most since November, according to weekly ICE Futures Europe data on futures and options.

Exxon Mobil Corp. and Chevron Corp., the two biggest US oil explorers, each missed Wall Street’s profit and production estimates, spurring a stock selloff for both as wary investors hit the lifeboats.

Weatherford International Plc dropped more than 16% after reporting worse-thanexpected results for the fourth quarter and a lower forecast for the first three months of this year. – Bloomberg