KUALA LUMPUR: Blue chips could start off the new week on Monday, Feb 7 on a strong note following the firmer close on Wall Street on Friday, but investors' anxiety over the unrest in Egypt could restraint aggressive buying of stocks which were sold down in January.
On Wall Street, the Standard & Poor's 500 posted its best week in nine on Friday as the market defied calls for a pullback, and investors rotated into defensive and lagging sectors in a move that could intensify in coming weeks.
Reuters reported signs of improvement in the economy and strong corporate earnings have propelled stock prices, but tapering volume, meager gains and declining numbers of advancing stocks pointed to waning buying interest at the end of the week.
The Dow Jones industrial average rose 29.89 points, or 0.25%, at 12,092.15. The Standard & Poor's 500 Index added 3.77 points, or 0.29%, at 1,310.87. The Nasdaq Composite Index climbed 15.42 points, or 0.56%, at 2,769.30. For the week the Dow rose 2.3%, the S&P 500 added 2.7% and the Nasdaq gained 3.1%.
On the outlook for the Malaysian stock market, OSK Research expects the FBM KLCI to rebound in February with a better than expected fourth quarter 2010 results season. It expects banking and consumption related sectors such as aviation, retail and media to attract interest. It also sees the O&G sector continuing to enjoy good newsflow.
'For February, we recommend rebound plays (SP SETIA BHD  and KENCANA PETROLEUM BHD ), strong results (CIMB Group Holdings Bhd and AIRASIA BHD ) and laggards (KPJ HEALTHCARE BHD ),' it said in a recent research note.
Maybank Investment Bank Research meanwhile said with Petroliam Naskional Bhd launching the marginal'' field development, it said there are many positives and re-rating catalysts'' from Kencana and SAPURACREST PETROLEUM BHD 's win on the Berantai risk service contract RSC project, (for example elevation up the O&G value chain, order book enhancement and earnings expansion).
'Our preliminary estimate is a'' 2.0 sen to 3.0'' sen'' (+14% to 18%)'' impact on Kencana's'' and SapCrest's'' FY12 EPS'' respectively. With nine other'' RSC's'' in the pipeline,'' Kencana and SapCrest could be in the running for more in the future, while Dialog'' is a possible participant, in our view. We are Buyers of'' Kencana (TP: RM3.10), SapCrest (TP: RM3.80) and Dialog (TP: RM2.60),' it said.
Investors should also keep an eye on PLANTATION  and food-related stocks as food inflation becomes more acute.
The United Nation's Food and Agriculture Organisation World said food prices surged to a new historic peak in January, for the seventh consecutive month. It warned high prices are likely to persist in the months to come.
The FAO said its updated FAO food price index -- a commodity basket that regularly tracks monthly changes in global food prices ' averaged 231 points in January and was up 3.4% from December 2010.
Meanwhile, plantation stocks could be in focus following reports that the cooking ingredient becomes the next target for emerging markets seeking to buy big and dampen adverse effects of booming world food prices.
Reuters reports palm oil output and stocks, already lagging robust demand due to rains in top Southeast Asia producers, could be made worse should the cooking ingredient become the next target for emerging markets seeking to buy big and dampen adverse effects of booming world food prices.
As governments from India and Thailand to Egypt act to quell soaring food inflation and public anger, world cooking oil supplies look uncertain as the impact of dry weather and social unrest in the Argentine soy crushing sector lingers.
Source: The Edge 5 Feb 2011