US/MALAYSIA MARKET MORNING QUOTES

MALAYSIA MARKET

KL shares seen up on Wall St rally

MALAYSIAN shares are expected to rise today after the US government’s massive bailout for Citigroup spurred a big relief rally on Wall Street.
A surprise rate cut from Malaysia’s central bank is unlikely to boost markets as it shows Bank Negara seeking to forestall a looming economic slowdown.
The Dow Jones industrial average raced up 4.9 per cent to 8,443.39 while the Standard & Poor’s 500 Index jumped 6.5 per cent to 851.81 after the US government said it will inject US$20 billion into Citigroup in an effort to prevent a bank collapse.
“The Citigroup bailout is a big relief for the market. But I don’t expect a broad-based rally on the local market, it may just be a few key blue chips,” said a dealer from a bank-backed brokerage.

Malaysia’s benchmark share index yesterday ended 1.3 per cent lower at 855.39 points, still off its year low of 801.27 points hit on October 28.
The central bank’s decision yesterday to cut its key interest rate will have limited impact on the local market’s performance, said the dealer.
“What’s important now is what’s happening in the US and I don’t think a 25 basis point cut would make a difference,” he said.
Bank Negara, the central bank, cut its overnight policy rate to 3.25 per cent from 3.50 per cent on Monday, the first rate change in over 2 years and the first cut in over 5 years, and signalled it was ready to cut further. - Reuters

US MARKET              

Dow Ends up Nearly 400 After Bailout of Citigroup

The government's plan to bail out Citigroup sent Wall Street soaring Monday for the second straight session as investors hoped that the worst of the financial industry's problems might finally be over. The Dow Jones industrials surged nearly 400 points, and all the major indexes jumped more than 4.5 percent.

"The government has taken a new quill out," said Scott Bleier, founder of market advisory service CreateCapital.com. "They've gone to where they didn't go before in terms of trying to secure the system. Some of that vulnerability seems to be gone now."

Still, the market remained wary, especially with the economy in a serious downturn. The Dow was up more than 500 points in the last hour before giving up some of its gains. Many investors wanted to take some money off the table before any bad news arrived. And the market has frequently done sharp reversals since the start of the credit crisis 15 months ago.

"You're definitely seeing relief," said Anthony Conroy, managing director and head trader for BNY ConvergEx Group. "More than anything, the Fed repaired some of the psychological damage that was being done to the sector. I think the Fed is poised to do whatever they possibly can to help the financials get through the current turmoil."

"Not all banks are unhealthy, so knowing that the Fed is there is enough," Conroy said.

According to preliminary calculations, the Dow rose 396.97, or 4.93 percent, to 8,443.39.

Jim Baird, chief investment strategist with Plante Moran Financial Advisors, said the uncertainty over whether the government's cocktail of direct investments in financial houses and support of debt obligations will prove effective has led to recent stock market volatility. He warned, however, that the concerns about banks and the broader economy are likely to continue, he said.