Wall Street selloff spooks markets
Malaysian and Indonesian bourses lead regional losses
PETALING JAYA: While some markets managed to rebound amid an onslaught of regional shares, the Malaysian and Indonesian bourses led losses as investors remained spooked by the overnight selloff on Wall Street and volatile oil prices.
Both the Malaysian and Indonesian stock markets were closed on Tuesday for the Prophet Muhammad’s Birthday public holiday.
Tracking the overnight Wall Street performance, the local benchmark FBM KLCI closed 0.9% lower, while the Jakarta Composite Index (JCI) lost 0.95% yesterday.
The FBM KLCI ended at 1,695.37 points, down 15.34 points.
This was off an intra-day low of 1,689.68 points, in a trade that saw 2.05 billion shares worth RM1.94bil changing hands.
The selldown on the FBM KLCI was led by selected blue chips such as Axiata Group Bhd, Malaysia Airports Holdings Bhd, Genting Bhd and IOI Corp Bhd.
Overall, on the local bourse, losers trumped gainers by 497 to 319, while 359 counters were unchanged.
A dealer told StarBiz that fear and uncertainty continued to grip the market, as investors had been spooked by a number of nega-
tive developments.
“The selloff in the local bourse was an anticipated outcome of the overnight steep decline in the US stock market and volatile oil prices that have raised fresh concerns over the condition of the global economy,” he said.
“Sentiment on the local bourse is already quite fragile, as investors are still cautious about the ongoing US-China trade tensions and uncertainties over Brexit; so it is not surprising that they are avoiding risky assets such as stocks for the time being,” he explained.
Wall Street saw a continued selloff overnight, with all major US benchmarks falling more than 1.5% on Tuesday, led by a slump in technology stocks such as Apple and retail stocks such as Target, while US energy stocks were weighed by plummeting oil prices.
All in, the Dow Jones Industrial Average lost 551.80 points, or 2.21%, to 24,465.64, while the S&P 500 fell 48.84 points, or 1.82%, to 2,641.89, and the Nasdaq Composite dropped 119.65 points, or 1.70%, to 6,908.82 on Tuesday.
Oil prices, however, stabilised yesterday after slumping more than 6% the previous day, with some support coming from a report of an unexpected drop in US commercial crude inventories.
The Brent crude oil futures were up 1.36% to US$63.37 per barrel as at 4.44pm yesterday, while the US West Texas Intermediate (WTI) crude oil gained 1.95% to US$55.48 per barrel.
According to an analyst, indicators suggested that the local stock market could rebound today following yesterday’s decline.
“Malaysian shares plunged more than regional peers on Wednesday, as they played catch-up with regional peers after a one-day holiday.
“But as we can see, several regional markets have already pared losses, and as it stands, European stocks are rallying along with US futures, so we could likely see a rebound in the FBM KLCI on Thursday (today),” he explained.
Among the regional markets that closed in negative territory yesterday were Japan’s Nikkei 225, which lost 0.35% to 21,507.54; South Korea’s Kospi, down 0.29% to 2,076.55; and JCI, down 0.95% to 5,948.05.
Ending in positive territory were Hong Kong’s Hang Seng, which gained 0.51% to 25,971.47; the Shanghai Composite Index, up 0.21% to 2,651.51; and Singapore’s Straits Times Index, up 0.44% to 3,040.30.
Currency-wise, the ringgit weakened against the US dollar due to a combination of weak oil prices and the strengthening greenback.
The local note briefly breached the critical 4.20 level against the greenback in earlier trade yesterday, before ending at 4.1938 to the US dollar, which represented a depreciation of 0.15% from Monday’s close.