KUALA LUMPUR: The recent weakness seen on the domestic market is likely to extend itself following a hawkish outlook in the US Federal Reserve’s recent economic survey.
Findings in the US central bank’s Beige Book, a regular survey of the US economy, in the six weeks leading up to May 20, suggested slight or modest growth.
The survey also suggested that businesses have grown more pessimistic in their outlook as compared to a few months ago.
Investors are looking ahead towards the release of the US’s 1Q gross domestic product tonight, which will shed more light on the performance of the world’s largest economy.
Overnight, the Dow Jones Industrial Average shed 441 points or 1.06% to 38,441.54, returning the index to its lowest in four weeks. The S&P500 was down 0.74% to 5,266.95 while the Nasdaq dropped 0.58% to 16,920.58
In light of the downbeat tone, Apex Securities Research said it expects the FBM KLCI to trade on a downward bias consolidation pattern in the absence of fresh catalysts.
“The extended weakness may be weighed by the hawkish outlook from the US Beige Book which highlights potential higher for longer interest rate outlook.
“Looking ahead, key focus lies on the pinnacle of the quarterly reporting season, which will dictate market sentiment,” it added.
It cautioned also that any further recovery is expected to be tampered by quick profit-taking, over the interim.
At 9am, the FBM KLCI fell 2.l4 points to 1,603.21, exhibiting weakness for a fifth consecutive day as investor sentiment was weighed down by compounding evidence that US rate cuts will be delayed.
There was a mixed performance among the blue chips with CIMB dropping four sen to RM6.83 and Hong Leong Bank shaving four sen to RM19.26 ahead of their respective results announcements, while Kuala Lumpur Kepong rose 18 sen to RM21.54.
Lagenda Properties continued to face heavy selling pressure after a sell-off yesterday on news that a “senior personality” of the company was being probed by the authorities pertaining to the subdivision of Malay reserve land in Manjung, Perak.
Lagenda’s board said in a bourse filing yesterday it was aware of the report and is assessing the implications of the development.
Shares in the property developer plunged 26.9% at the start of Thursday trading to 85.5 sen before paring some losses to 95 sen a share as at 9.13am after 112.3 million shares were done.
Meanwhile, other actively traded shares included MYEG up three sen to RM1.07 and Epicon gaining 1.5 sen to 33 sen.
Capital A dropped two sen to 84 sen following its results announcement yesterday.
