US Markets Update and OutlookLight on data, earnings - and maybe, cheer
MarketWatch: Stock investors looking for a little year-end cheer may instead find themselves finishing the holidays with another dose of bah, humbug. Events that helped stocks post mild gains in the past week - namely, government interventions to prevent an even worse recession - may be in short supply, as Congress stays on recess and President-elect Barack Obama vacations for the holidays in Hawaii. Instead, a smattering of economic news and earnings from Walgreen Co. and Micron Technology will shape trading in the holiday-shortened week. These days, however, it's what Washington says that matters most.
"Other than the government largesse, there's really no good news," said Alec Young, equity strategist at Standard & Poor's. "It's not surprising rallies are fading." Stocks posted modest advances last week, thanks largely to the Federal Reserve's decision to cut interest rates to near zero percent, a record low, and its promise to buy up more debt to rejuvenate the housing market. The White House's decision to lend U.S. auto makers up to $17 billion also gave a lift to the indexes.
But the next big item on Wall Street's wish list - progress on another fiscal stimulus package - is likely to wait until next year, analysts said.
Fewer trading days
If holiday fizz is in low supply, investors won't suffer for long. The New York Stock Exchange closes at 1 p.m. Eastern on Wednesday and is closed Christmas Day. Other markets also have curbed hours. When they do trade, uncertainty about the length and depth of the global recession is likely to dominate. Optimism that the recession may avoid the worst projections has driven stocks higher in recent sessions.
But these gains have often evaporated by the close of trading, as fears took hold. The Friday gave up a nearly 200-point lead to end 26 points lower "People are placing bets based on how long the recession will be," Young said. A lot of bad news has been factored in already, which has helped the S&P 500 and Dow avoid undercutting their November lows. "But we're not going to get much upside," he said, "until people get the sense that things are stabilizing." Stocks have lost about 35% to 40% this year.
Economy: durables, spending
On the economic front, durable goods orders are expected to have another significant decline as business caution has postponed any capital spending. New home sales should drop to the lowest level since the 1981-82 recession, and consumer spending should drop for the fifth month in a row. "Recent economic indicators suggest that the U.S. economy fell off a cliff in the fourth quarter," said Michael Moran, economist at Daiwa Securities.
The Treasury Dept. will also test investors' appetite to buy yet more government debt at low yields. It will auction $38 billion in two-year notes and $28 billion in five-year notes. Both will set records for size. The Fed's aggressive moves supported a rush into Treasurys this week, driving yields to record lows and shaving a nearly half percentage point from yields on the benchmark U.S. Treasury note.
KLSE Technical Update and Outlook
I Capital: The KLSE CI is below its 30-day, 50-day and 50-week moving averages. Its daily MACD is bullish but its DMI is bearish.
On weekly Plantation Index. In the past few weeks, we have seen the Plantation Index starting to rebound. Many might think this is a sign of bottoming out as it has retraced towards the 50-week moving average resistance. Also, the Plantation Index has been moving sideways over the past 2 months after the sharp fall, which is common in a strong trend. Afer sinking in the negative territory for months, the daily indicators have finally turned bullish and the weekly MACD has also made a bullish crossover. However, the oil price is still dropping, despite a record oil production cut by OPEC. Would the current period of consolidation continue or are we seeing a cyclical bottom?
* Happy Dongzhi - Tang Yuen (Winter Solstice) Festival!
* Sterling near parity with Euro! 1 euro = 95.5 pence
* BT: Malaysia November inflation slows to 5.7% (October 7.6%)
* MS: Malaysia's growth for 2009 will be 0.5%.
* The Straits Times(S'pore): Japan's growth for the year to March 2010 will be zero. It recently cuts key interest rate to 0.1% and said it would buy corporate debt as a deepening recession chokes off funding for business.
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