Sentiment on Bursa was somewhat ambivalent on July 24. Some profit-taking activities are to be expected after the KL Composite Index's 36-point gain in the previous two trading days.
Despite opening in negative territory, the KLCI's losses were, by and large, limited. The benchmark index drifted sideways for the better part of the day. Selling pressure was well absorbed. Investor confidence was likely shored up by broadly positive sentiment in key regional markets.
Bellwether indices in most Asian markets traded higher on July 24, consolidating their gains from the last few sessions. The continued pullback in crude oil prices allayed inflationary concerns, for the moment. Crude oil futures traded on the New York Mercantile Exchange fell below US$125 (RM408.75) per barrel after the US reported rising stockpiles. Higher pump prices is evidently having some impact on demand.
Lower oil prices, if sustained, should give governments around the world some breathing room to hold off on raising interest rates. Interest rate is, traditionally, one of the major tools to combat inflation. However, with demand slowing down, higher borrowing costs will further hurt economic growth.
Having said that, many investors remain cautious. It is too soon to declare the worst over. The current rally may just be a brief reprieve, a technical rebound from the last sell-off, and we could be looking at more volatility in the days ahead. Certainly, jittery investors would require more evidence before committing more money to the global financial markets.
About 567 million shares were traded on the local bourse. Although on July 24's trading volume was fairly robust by recent standards, it is far from what is needed for a sustained rally. Some of the most actively traded counters were AirAsia, IOI Corp, MRCB and MK Land. A spurt of last minute buying lifted the KLCI two points higher at 1,141.6. But market breadth was in the red. At the close, losers outnumbered gainers by about seven to five.
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