KUALA LUMPUR: The KL Composite Index fluctuated within a very narrow band at the start of the new week. Most investors appear ambivalent on the outlook for the local bourse. We expect share prices will continue to drift in the near term until some clear leads emerge.
The US and key Asian markets fared poorly last week. The closely watched Dow Jones Industrial Average slipped 3.9% on the week. That weak sentiment spilled over into trading Monday. The relevant bellwether indices in Japan, Hong Kong, Singapore and Shanghai all closed sharply lower.
One of the primary concerns is record high oil price. Crude oil futures traded on the New York Mercantile Exchange briefly broke through the US$135 (RM438.75) per barrel mark at the end of last week. Although prices have since fallen back slightly, there is no indication that the retreat can be sustained.
Record high oil prices are fuelling inflationary pressures worldwide and are expected to crimp consumer spending in the coming months. That will, in turn, hurt economic growth. The extent of the impact remains elusive, at this point. Hence, investors' reluctance to take any major, fresh positions in financial markets, at least for now.
The KLCI traded within a narrow eight-point range, staying relatively flattish for the better part of the day. Confidence weakened a little in the afternoon trading session. The benchmark index ended slightly lower at 1,273.4 points. Market breadth was in the red throughout the trading day. At the close, losing stocks outnumbered gaining ones by a ratio of more than two to one.
Volume was relatively thin. As expected, many investors are staying on the sidelines in view of prevailing uncertainties. Just about 459 million shares were traded Monday. The most actively traded were the rights for YTL Power warrants. The rights will cease trading Wednesday.
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