FKLI Related News (Mon, Mar 11)

U.S stocks had the biggest weekly rally since January, driving the Dow Jones Industrial Average to a record, amid faster-than-forecast jobs growth and speculation that the Federal Reserve will continue to stimulate the economy. The S&P 500 rallied 2.2 percent to 1,551.18 over the five days, and is less than 1 percent below its record. The Dow added 307.41 points, or 2.2 percent, to 14,397.07, the highest level in the gauge’s 116-year history. Both measures capped their best weekly gains since Jan. 4. “The U.S. economy is in a really strong position right now, relative to the globe and relative to where we were three or four years ago,” Jeff Schwarte, a money manager who helps oversee about $282 billion in Des Moines, Iowa, at Principal Global Investors, said in a phone interview. “The Fed will continue with this low growth, high-liquidity market until we have a sustained period of jobs growth.”

Stocks rose every day during the week amid data showing jobless-benefit claims fell to a six-week low and American employment rose by 236,000 jobs last month, exceeding forecasts. Investors shrugged off automatic cuts in U.S. federal spending that went into effect March 1 following a congressional impasse. The cuts, known as sequestration, total $1.2 trillion over the next nine years. While the jobless rate dropped to 7.7 percent, the lowest since December 2008, it’s still above 6.5 percent, a reason the Fed cited for keeping interest rates near zero. Fed Vice Chairman Janet Yellen said on March 4 the central bank should press on with $85 billion in monthly bond buying while tracking possible costs and risks from the unprecedented program.

More than $10 trillion has been restored to U.S. equity values during the four-year bull market as the S&P 500 (SPX) more than doubled from the bottom in 2009, fueled by better-than-estimated corporate earnings and monetary stimulus from the Fed. The Dow recouped all its losses from the financial crisis in less than 65 months, more than a year faster than the recovery from the Internet bubble. Options traders scaled back hedges against equity losses as stocks rallied. The Chicago Board Options Exchange Volatility Index (VIX), which measures the cost of using options as insurance against declines in the S&P 500, tumbled 18 percent to 12.59 for the week, trading near its lowest level since April 2007. Financial companies rose the most among 10 S&P 500 groups, surging 3.4 percent. The Fed said that of the 18 largest U.S. banks, all except Ally Financial Inc. could withstand a deep recession and maintain capital above a regulatory minimum.

World equity markets rallied and the U.S. dollar strengthened on Friday after an unexpectedly sharp jump in U.S. employment in February reinforced the view that the world's biggest economy is gaining traction. Commodities rose broadly on Friday due in part to bullish U.S. jobs data and a government crop report forecasting tight corn and orange juice supplies as the complex posted its first weekly gain after losses the four previous weeks.

The FBM KLCI closed marginally higher at 1,653.96 on Friday  after central bank decided to keep overnight policy rates unchanged at 3%. However the volume traded was on a declining trend, having shed 2% since Monday indicated that investors were quite reluctant to take position in the market. Investors are waiting for the Malaysian Prime Minister to announce the dissolution of Parliament. The 13^th general election must be held by end-April and many cautious and risk-averse investors have scaled down their holdings in the local market. 

FKLI spot month contract opened slightly lower this morning at 1,650.50. Today's Support and Resistance for March contract is located around 1,640 and 1,660 respectively.