Led by selected index stocks, the FBM KLCI moved higher over the week and touched a 2-week intraday high of 1,540.6 points on Friday. Profit-taking subsequently caused the index to close at 1,535.0 points and register a gain of 0.8% for the week.

Average daily trading volume decreased to 1.0 bil from 1.2 bil units in the preceding week while daily turnover in value terms fell to RM1.3 bil from RM1.5 bil over the same period.

On Wall Street, shares prices were higher due to stronger-than-expected corporate earnings for 1Q2011. Following the weaker-than-expected 1Q2011 GDP data for the U.S. and the Federal Open Market Committee (FOMC) statement on 28th April, investors expect U.S. monetary policy to remain easy for an extended period. The Dow gained by 2.4% to close at 12,811 points for the week. The broader-based S&P 500 Index rose by 2.0% to 1,364 points while the Nasdaq was higher by 1.9% to 2,874 points over the same period.

In the U.S., economic activities weakened with GDP growth moderating to 2.3% in 1Q2011 on a year-on-year basis from 2.8% in 4Q2010 due to weaker investment and government spending. Manufacturing activities in the U.S. consolidated with the Institute of Supply Management Purchasing Managers’ Index declining to 60.4 in April from 61.2 in March on lower production and new orders.

Oil prices registered a weekly gain of 2.0% and closed at US$113.93/brl on ongoing concerns over the political uncertainties in the Middle East.

On the local front, Malaysia’s money supply (M3) growth rose to 8.2% in March from 7.9% in February on higher growth of fixed deposits and currency in circulation. Meanwhile, bank lending rose to 13.2% from 12.2% over the same period on stronger loan demand from the financial and real estate sectors.

On a weekly basis, the Ringgit appreciated by 1.5% against the US$ to close at RM2.960 while on a-year-to-date basis the Ringgit strengthened by 3.4% against the greenback.

Looking ahead, the local market is anticipated to remain supported by resilient economic growth and low real interest rates. However, investors will continue to monitor the outlook for the U.S. and global economic activities.

As at 29th April 2011, the local stock market is valued at a P/E of about 16.1x on 2011 earnings, which is at a discount to its 10-year average P/E ratio of 16.7x. The local market is also supported by a gross dividend yield of 3.8%, which exceeds the 10-year average of 3.6% and the 12-month fixed deposit rate of 2.85%.