Rising Dow lifts regional markets

  • Business
  • Friday, 27 Apr 2007

PETALING JAYA: Regional markets advanced yesterday after the Dow Jones ended Wednesday on a high note, bolstered by healthy corporate earnings growth and a larger-than-expected rise in March durable goods order. 

Singapore’s Straits Times Index finished 1.31% up to 3,406.89 points while China’s Shanghai and Shenzhen bourses closed 1.04% and 1.38% higher at 3,783.06 and 1,057.05 points respectively. 

Japan’s Nikkei 225 rose 1.12% to 17,429.17 points while South Korean and Philippine indices added 0.49% and 1.24% to 1,553.13 and 3,350.34 points respectively.  

Bursa Malaysia was closed yesterday for the installation of Terengganu Sultan Tuanku Mizan Zainal Abidin as the 13th Yang di-Pertuan Agong. 

“The spillover effect to regional markets yesterday was apparent,” said MA Securities head of research Wee Kim Hong. 

He said the Dow provided a lead of sorts for other markets and that the “positive momentum” should be sustainable, fuelled by healthy merger and acquisition activities and good corporate earnings growth. 

“Locally, we are also still positive on the KL Composite Index (KLCI), given that there are no major issues here,” he said. 

Wee said the KLCI was still playing “catch-up” with bourses in the region. 

On Wednesday, the Dow finished above 13,000 points for the first time, thanks to strong earnings at major companies and a larger-than-expected 3.4% rise in March durable goods orders, according to foreign news agencies. 

Among the companies that beat forecasts on Wednesday were soft-drinks maker PepsiCo Inc, materials manufacturer Corning Inc and Boeing Co, Associated Press said. 

Dow Jones rose 135.95 points, or 1.05%, to 13,089.89, after hitting a record intra-day high of 13,107.45 in the final hour of trading. 

Despite being generally upbeat, some industry experts opined that “big negatives” such as high oil prices and the weakening of the US dollar remained a concern. 

“The wall of worry is out there but the market remains indifferent,” Avalon Partners chief market economist Peter Cardillo told Business Week

Cardillo was also quoted as saying that Wednesday’s release of the Federal Reserve’s Beige Book report on economic conditions “seems to portray something we all like to have: a Goldilocks economy”, meaning an economy that is seemingly stable. 

But he doubts that can last in view of the high oil prices and weak dollar. “That’s the missing link and the reality check that the market is going to encounter,” Cardillo said. 

“We’ve had pockets of companies reporting better earnings, and in light of the Fed not appearing to raise rates anytime soon, that bodes well for the market,” Baird & Co director of equity trading Jim Herrick told AP. 

“Going forward, the market’s going to be data-driven. The market is going to focus on economic data to get a hint about what the Fed will do in the latter half of the year,” he said. 

Meanwhile, Standard & Poor’s chief technical strategist Mark Arbeter believed the S&P's 500 was a better gauge of the overall stock market, which numbers almost 7,000 companies. 

He told The Times Argus that the S&P's 500 all-time high of 1,527.46 on March 24, 2000 was “a more meaningful threshold” than the Dow’s 13,000. 

In yesterday's market opening, the Dow Jones industrial average was up 13.98 points, or 0.11%, at 13,103.87. The S & P's 500 index was down 1.33 points, or 0.09%, at 1,494.09.

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