Asian Markets Slips on Oily Ground

Sensex, Nikkei Lead the fall as Major Indices Close For Holiday

Asian markets could not carry their broad advance of previous week closing sharply lower today, with banking and automotive shares leading decliners as oil stayed near record highs and investors fretted the global economy could be headed into another round of credit market turmoil.

Light, sweet crude oil for July delivery fell as much as 76 cents to $137.78 a barrel in electronic trading, after climbing nearly $11 a barrel to close at $138.54 Friday on the New York Mercantile Exchange. Friday's surge in oil prices was driven by heightened concerns that Israel may attack Iran, one of the world's biggest oil producers, and that a conflict could result in a blockade of the Straits of Hormuz, through which 20% of the world's crude oil passes each day.

Japan's Nikkei 225 Average and the Topix index both closed 2.1% lower to 14,181.38 and 1,397.54 respectively. On the economic front, Japan's index of leading indicators came in at 30.0 in April continuing its run for below the boom-or-bust threshold of 50.0 in the ninth straight month. The coincident index, which measures the current state of the economy, stood at 22.2. In March it stood at 27.3.

After plummeting by about 550 points in the opening trade India’s Sensex down recovered a bit but continued to be the biggest loser of the region. In the afternoon trading the Sensex was down by 3.1% to 15,084.70.

South Korea's Kospi index shed 1.3% to 1,808.96. Singapore's Straits Times index was off 2.1% to 3,080.29 while Taiwan's Weighted Price Index fell 1.8% to 8,578.96.

Markets in Australia, China, Hong Kong and the Philippines were closed for public holidays.

The slump in Asia follows a punishing session for U.S. stocks Friday, as weak employment data and a surge in crude oil prices combined to lead the Dow Jones Industrial Average to its worst one-day decline in 15 months. At the end of Friday, the Dow Jones Industrial Average plunged 394.64 points, or 3.1%, to end 12,209.81, giving it a weekly loss of 3.5%. The S&P 500 Index fell 43.36 points, or 3.1%, to 1,360.69, leaving it down 2.9% for the week. The technology-heavy Nasdaq Composite Index shed 75.38 points i.e. 3%, to 2,474.56 for a weekly decline of 1.9%.

In currencies, the yen was exchanged at 105.19 yen against the U.S. dollar, compared to 104.85 in New York late Friday.

In other regional action, New Zealand's NZX-50 gave up 1.4% and Malaysia's KLSE Composite shed 1.6%. Indonesia's Jakarta Composite fell 0.9% and Thailand's SET Index fell 1.2%.

European markets followed Asian markets with negative opening as shares of banks and airlines again fall down following the soaring crude oil prices.

Of national indexes, the German DAX 30 index fell 0.5% to 6,773.61, the French CAC-40 index declined 0.3% to 4,782.51 and the U.K. FTSE 100 index lost 0.2% to 5,896.50.

On the economic release side, Germany's trade surplus rose in April on stronger exports, giving little sign that the country's exports are being squeezed by a global economic slowdown.

The German trade surplus totaled EUR18.7 billion - higher than a revised EUR16.6 billion surplus in March, which was originally reported at EUR16.7 billion.

Exports totaled EUR85.4 billion on a seasonally adjusted basis, showing a 1.2% rise from March, following two consecutive months of declines. April exports surged 13.9% from a year earlier.

German seasonally adjusted imports eased slightly in April, falling to EUR67.6 billion from EUR69.1 billion in March, a figure originally reported as EUR69.2 billion. But imports over the full year are holding up. Total imports so far this year were EUR272.9 billion, up from EUR253.1 billion in the year-earlier period.

The country's current account surplus fell to EUR14.5 billion, from EUR17.5 billion in March, which was previously reported as EUR17.2 billion.

U.K. factory gate prices soared in May, climbing at their fastest pace since records began in 1986, highlighting the policy dilemma faced by the Bank of England in the coming months as the corporate and consumer mood darkens.

The output price index for home sales and manufactured products rose 1.6% on the month in May - driven largely by recovered secondary raw materials and petroleum products. On the year, the output PPI rose 8.9%, much more than the upwardly revised 7.6% gain in April.

Excluding volatile food, beverages, tobacco and petroleum prices, output producer prices rose 1.3% on the month and 5.9% on the year in May - Sharpest annual gain since March 1991. In April, the core index rose 1.2% on the month and 4.6% on the year.

Meanwhile, the annual rate of gain in input prices also surged to a fresh record high in May, mainly due to the climbing price of crude oil, indicating yet more price pressures in the pipeline.

The input price index for materials and fuels purchased by the manufacturing industry gained 27.6% on the year in seasonally adjusted terms, following a 24.7% rise in April. In monthly terms, the index rose 3.8% on the month, following a 3.2% rise in April.

Looking ahead the day is scheduled to release housing starts from Canada followed by pending home sales from United States. In the late evening BRC will release its retail sales for the United Kingdom which will be accompanied by Bernanke’s Speech and Japan’s Core machinery orders.