Asian Markets Ends Lower Following Wall Street Tumble

Nikkei, Shanghai Back In Red While Sensex Continues Gaining Further

The stock markets across the Asian region closed lower, on renewed concerns about the strength of the U.S. financial sector. Wall Street tumbled overnight after a Credit Suisse analyst cut his price target on American International Group and the National Association of Realtors reported weaker-than-expected existing home sales for July. The Dow Jones industrial average slumped 2.08% and the tech-heavy Nasdaq composite index lost 2.03%.

Oil prices rose yesterday, edging above $115 a barrel on concerns about Tropical Storm Gustav brewing in the Caribbean. Light, sweet crude for October delivery closed up 52 cents at $115.11 a barrel on the New York Mercantile Exchange. In late Asian session Tuesday, oil was up 43 cents at $115.54 a barrel.

In the currency market, the U.S. dollar strengthened to the upper 109-yen levels from mid 109-yen levels in early Tokyo deals, but was lower compared to near 110-yen range in late local trade on Monday.

The Australian dollar closed at its weakest level in local trade this year. The Aussie finished the session at US$0.8559-0.8563, down almost one U.S. cent from Monday's close of US$0.8652-0.8654.

The New Zealand dollar hit its lowest level in a weak after the Statistics New Zealand reported worse-than-expected trade balance data. The kiwi eased to US$0.6970 from US$0.7050 late Monday. Against the Aussie, it slipped to A$0.8111 from A$0.8167.

South Korea's won plunged to a 45-month low against the U.S. dollar. The local unit closed at 1,089.4 a dollar, down from Monday's close of 1,078.9 a dollar.

The Japanese stock market closed lower, as investors locked in profits following yesterday's sharp gains and fresh worries about the U.S. credit market. After opening lower, tracking the negative lead from Wall Street, the market came off day's lows in the afternoon session as the dollar rose to the upper 109-yen levels.

The benchmark Nikkei 225 index closed down 0.8% at 12,778.71 and the broader Topix Index lost 0.8% to finish at 1,229.35.

On the economic front, the Bank of Japan said that Japan's corporate service price index climbed 1.3% on year in July, posting a score of 95.6. The increase was slightly below analyst expectations for an increase of 1.4% on year, but was higher compared to the 1.2% annual increase in June. The data also represented the 24th straight month of increase for the index. The index eased 0.1% from a month ago.

The Chinese market closed sharply lower, with the benchmark Shanghai Composite Index closing down 2.62% at 2,350.08, near its 20-month closing low. In Shenzhen, the All Share index plunged by 4.01% to 646.47.

In Hong Kong, the Hang Seng China Enterprises tracked Shanghai stocks zoomed up by 0.73% at 11,406.64. The benchmark Hang Seng Index plunged by 0.23% to 21,056.66.

The Australian stock market closed slightly lower, recovering substantially from a sharp fall in early trade. The market opened with a deep cut, tracking Wall Street's triple-digit loss overnight on fresh concerns related to the health of the U.S. financial sector, but recovered over the course of the trading session to end slightly below the flat line as big miners recovered and banks trimmed their losses.

The benchmark S&P/ASX 200 index closed down 0.1% at 5,007.5 after losing as much as 2% in the morning session. The broader All Ordinaries index lost 0.2% to finish at 5,082.3.

On the economic front, traders had little data to digest on Tuesday. Conference Board leading index for June, private capital expenditure for July and HIA new home sales for July are scheduled for release on Thursday.

The New Zealand stock market closed lower on Tuesday, giving away some of Monday's gains. After opening lower and losing ground in the morning session, tracking Wall Street's plunge overnight, the market recovered in the second half of the day to end slightly below the flat line. The benchmark NZX 50 index closed down 0.18% at 3,321.00 and the broader NZX All Capital index fell 0.51% to finish at 3,355.06.

New Zealand's trade deficit stood at NZ$781 million in July, well above analysts' expectation of around NZ$525 million, compared to NZ$808 million in July last year. Exports rose 29.6% on year, while imports increased 21.9% from a year earlier.

The South Korean market closed lower Tuesday after it snapped a five-day losing streak on Monday. Wall Street's plunge overnight and a steep fall of the won against the greenback weighed on most blue chips. The benchmark Kospi closed down 0.79% at 1,490.25. The key index tumbled to the 1,450-level in the morning, but managed to trim its losses as bargain hunting set in at lower levels.

On the economic front, the central bank's minutes showed that policymakers at the Bank of Korea unanimously voted to hold the key interest rate steady in July as concerns over spiraling inflation outweighed woes over the slowing economy. In a rate-setting meeting on July 10, the central bank froze the benchmark 7-day repo rate at 5% for the 11th straight month.

Meanwhile, South Korea's consumer sentiment fell to the lowest observed level since the country was hit by an unprecedented financial crisis in late 1997, amid concerns over rising inflation and an economic slowdown. An index gauging consumer sentiment in the economy and living conditions for the third quarter of the year stood at 37.7, compared to 47.8 recorded in the previous quarter, according to the Samsung Economic Research Institute.

In India the key benchmark indices shrugged off weak global cues to post marginal gains after a weak start, boosted by reports of a near normal monsoon. The BSE 30-share Sensex rose 0.30% to 14,493.20, as per provisional closing. At the day’s high of 14,495.27 hit in late trade, the Sensex gained 44.92 points. Sensex hit a low of 14,286.38 in early trade. At the day’s low, the Sensex lost 163.97 points. The S&P CNX Nifty gained 7.90 points or 0.18% to 4,343.25 as per provisional closing

In Singapore the Straits Times index decreased by 0.96% to 2,707.19. On the economic front, July factory output showed an unexpected fall of 1.8% after seasonal adjustments from June, as the economic slowdown in the United States and Europe continues to hit Asian exporters. The monthly manufacturing data follows a rise of 4.4 percent in June, revised from a rise of 4.5 percent, and a 6.2 percent decline in May.

From a year earlier, factory output in July slumped 21.9 percent, compared with a market forecast for a 17.1 percent drop. Manufacturing accounted for about a quarter of Singapore's S$229 billion ($162 billion) trade-dependent economy in 2007.

Elsewhere, Malaysia the KLSE Composite Index dropped down by 0.76% to 1,070.50. In Indonesia, the Jakarta Composite increased 0.92% to 2,107.55. The Taiwan's weighted index fell 0.94% to 6964.60.

In the other part of the world, European shares moved lower again, led by oil producers and mineral extractors as many commodity-sector companies restarted trading after a long holiday weekend in the U.K.

In the opening trade, the U.K. FTSE 100 index dropped 1.4% to 5,426.60, while the German DAX 30 fell a more modest 0.4% to 6,272.80 and the French CAC-40 also lost 0.4% to 4,336.94. At 10.37 GMT all this national indices continued to slump further. U.K. FTSE 100 index fell further at 1.8% to 5,405. The German DAX 30 index fell 0.18% to 6,285.89, while the French CAC-40 index decreased by 0.71% to 4,324.86.

On the economic front, German business confidence plummeted in August, hitting its lowest level in three years, raising fears that Germany is already in recession. The Ifo business climate index fell to 94.8 from 97.5 in July. The drop came despite lower oil prices and a weaker euro. The index measuring firms' business expectations hit its lowest level since February 1993, when Germany was mired in recession, after falling to 87.0 from a revised 89.9. The indicator for the current trading situation fell to 103.2 from a revised 105.6 in July.

Prior to this the German economy confirmed its slowdown as growth rate shrank in the first quarter. Gross domestic product fell 0.5% on the quarter between April and June when adjusted for seasonal and calendar effects after increasing 1.3% in the first quarter. The annual growth rate rose a seasonally adjusted 1.7%. That compares with unadjusted growth of 3.1% and 1.4% when adjusted for working days.

In U.K., the net mortgage lending and approvals for home loans were stable at a low level in July as the credit crunch and economic uncertainty continued to weigh on the housing market. According to the data released by the British Bankers' Association showed the number of mortgages approved rose to 22,448 in July from 22,369 in June, but remain 65% weaker on the year. The average of the previous six months was 34,104.

Net mortgage lending was steady at GBP4.3 billion in July, but was 22.7% weaker on the year. Gross mortgage lending eased to GBP14.6 billion from GBP15.0 billion in June, leaving it 25.2% weaker than in July last year.

In Spain the statistical organization has revised down its 2007 gross domestic product growth to 3.7% from a previously reported 3.8%.

Looking ahead the day is scheduled to release Nationwide data on housing prices for U.K, which will be followed by S&P Shiller home price index for U.S. In the evening we have consumer confidence index for the month of August, which will be accompanied by the new home sales stats. In the late evening we have Richmond Fed manufacturing index for the month of August, which will be followed by ABC Washington Post weekly consumer confidence index. However the focus of the day will be on FOMC minutes giving us the insights about the thinking process of the policymakers.