08-08-2006: Cautious ahead of Fed meeting

Share prices on Bursa closed mixed to slightly lower on Aug 8 with most investors staying sidelined and cautious ahead of the all-important US Federal Open Market Committee meeting on Aug 8 night.

The Federal Reserve will give its pronouncement on US interest rates and the scope for future rate hikes. Unlike previous meeting, most analysts are more divided this time around as to whether the interest rates will be raised.

Recent economic data have shown a deceleration in US economic growth – particularly in consumer spending, and the housing and labour markets, although some inflationary elements remain. Some fear the US economy is also slowing on its own, and further rate hikes will sharpen any slowdown, which will have repercussions for the rest of the world.

The KLCI alternated between marginal positive and negative territory throughout the day, ending just 0.6 of a point higher at 939.1. The index traded within a narrow 3-point range throughout the day. Declining stocks edged out advancing ones by a 7-to-6 ratio at the close. A total of 426 million shares changed hands.

Retail and penny stocks continued to dominate trading, but almost all of them were in the red. The top actives include Iris, MP Tech, UEM World and Tebrau. PLUS was the only noticeable blue chip in the top 10 actives list – it closed unchanged. Major losers include BAT, Maybank, IJM and Hong Leong Bank.