Asian Equities Slide As Wall Street Tumble

Nikkei, Sydney Fell By 4% While Sensex Showed A Gain Of 2%

The stock markets across the Asian region closed mostly lower after U.S. lawmakers rejected a $700 billion plan to bailout the ailing U.S. banks and ward off recession. However, the Asian markets pared back some of the losses on news that U.S. President George Bush will make a statement later today on his administration's response to the crisis in financial markets. The stock markets in Hong Kong and India recovered sharply and moved into positive territory. The Chinese market and the Indonesian market remained closed on account of public holidays.

Oil was quoted at $95.16 a barrel, down $1.21, by 4:38 a.m. ET after the contract for November delivery plunged $10.52 to settle at $96.36 on the New York Mercantile Exchange on Monday.

In the currency market, the U.S. dollar strengthened to the upper 104-yen levels in late Tokyo deals from the upper 103-yen range in early trade. On Monday, the dollar closed the local session at 106.14-106.15 yen.

The weak current account data added to pressure on the South Korean won. The won finished the local session down 1.5%, its lowest level since early 2003. The local currency closed at 1,207.0 won to a dollar, down 18.2 from Monday's close of 1,188.8 to a dollar.

The Australian dollar fell to its lowest in two weeks against the U.S. dollar on Tuesday. The Aussie fell to US$0.8013 in late trade from US$0.8250 on Monday, but was off the day's low of US$0.7935, helped in part by better-than-expected domestic retail sales data.

The New Zealand dollar was sold off following the surprise vote against the US$700 billion bailout plan for U.S. banks. The kiwi finished the session at US$0.6700, recovering from the day's low around US$0.6640, but well down from Monday's close at US$0.6858.

The Philippine currency also came under pressure after the US rejected a $700-billion bailout plan for the financial sector and plunged back to the P47 to a dollar level. The peso opened at P47.10 to a dollar on Tuesday, 35 centavos weaker than it’s opening rate on 29 September 2008.

Coming back in equities, the Japanese stock market plummeted to its lowest level in three years, extending losses for the fourth straight trading session. Japanese stocks plunged around 5% in the opening move, tracking the overnight sell-off on Wall Street, after the U.S. Congress rejected a $700 billion bailout plan for the troubled American financial sector, but recouped some of their losses in the afternoon session on news that U.S. President George Bush will make a statement later today on his administration's response to the crisis in financial markets.

The benchmark Nikkei 225 Index closed down 483.75 points or 4.1% at 11,259.86, its lowest closing level since June 9, 2005. The index hit an intraday low of 11,160.83. The broader Topix Index of all First Section issues fell 40.46 points or 3.6% to finish at 1,087.41.

A slew of economic data were released today. The Ministry of Internal Affairs and Communications said that the seasonally adjusted rate of jobless people in Japan was 4.2% in August, higher than the analysts' expectation of 4.1%, and also came in higher than the 4.0% reported in July.

The Ministry of Economy, Trade and Industry reported that industrial output in Japan was down 3.4% in August compared to that for the previous month, representing the first decline in two months. That was sharply lower than the analysts' expectation that called for a 2.4% decline.

An index that measures Japanese manufacturing activity came in at a six-year low, according to the Nomura/JMMA Japan Purchasing Managers Index, standing at a seasonally adjusted 44.3 in September, lower than the August figure of 46.9.

Japan's housing starts picked up in August, exceeding economists' expectation, a report by the Ministry of Land, Infrastructure and Transport said Tuesday. Housing starts surged 53.6% year-over-year in August, marking a faster rate than the 19% recorded in July, and above the 49.8% expected by analysts.

Average Japanese monthly household spending in August fell a real 4.0% from a year earlier to 291,154 yen, the government said Tuesday.

Stock markets on Mainland China are closed for National Day holidays this week.

The Hong Kong stock market closed higher, staging a remarkable recovery, after bargain hunting picked up in late trade. The benchmark Hang Seng index closed up 135.53 points or 0.76% at 18,016.21, off the day's low of 16,799.29. For the month of September, the index has lost 3,245.68 points or 15%, while for the third quarter it has dropped 4,085.8 points or 18.5%.

The Australian stock market closed sharply lower on Tuesday, extending losses for the fourth consecutive trading session. After plunging more than 5% within minutes of opening on news that the House of Representatives failed to pass the U.S. government's proposed rescue plan for banks, the Australian market clawed back some ground in the afternoon but dropped again in the last minutes of trade to finish the session down 4.3%.

The benchmark S&P/ASX 200 index closed down 206.9 points at 4,600.5, its lowest close since December 2005. The broader All Ordinaries index fell 207.9 points or 4.3% to finish at 4,631.3.

Among a slew of economic data released today, the number of houses and apartments approved for construction in Australia in August decreased by a seasonally adjusted 3.7% from July, while the amount of credit extended to private sector entities rose by 0.5% in August following a 0.6% increase in July and retail trade increased 0.3% in August in trend terms to A$18.378 billion compared to an upwardly revised total of $18.319 billion in July.

The New Zealand stock market closed sharply lower on Tuesday, reversing Monday's mild gains. The benchmark NZX 50 index started off weak, plunging 148 points within the first thirty minutes of trading, after Wall Street slumped overnight following the news that the House of Representatives failed to pass the U.S. government's proposed rescue plan for banks. However, the key index recovered some ground over the course of the trading session. The benchmark NZX 50 index closed down 98.32 points or 3.18% at 3,090.22 and the broader NZX All Capital index lost 95.52 points or 3.07% to finish at 3,114.47.

On the economic front, the Statistics New Zealand reported that consents for new dwellings, including apartment units, continued to fall in August. The number of consents issued totaled 1,328 in August, marking the lowest monthly total since December 2000, down a seasonally adjusted 7.9% from July. For the full year through August 2008, consents for all new dwellings fell 20%.

Meanwhile, business confidence continued to improve in September, with the National Bank Business Outlook survey hitting positive territory for the first time in over six years. A net 2% expected better times over the year ahead, a turnaround from the net 20.5% expecting a worse outlook in the August survey.

The South Korean market closed slightly lower, recovering sharply from the 5.5% slump in early trade after U.S. Congress rejected a financial bailout plan. The market finished lower for the 3rd straight trading session. The benchmark Korea Composite Stock Price Index or Kospi closed down 8.30 points or 0.57% at 1,448.06 points, after hitting a session low of 1,376.72.

The recovery in the local stock market is partly attributable to market measures introduced by the government earlier in the day. The Financial Services Commission said that it would ban short selling of stocks for the time being and allowed listed firms to buy back more of their own shares.

Meanwhile, domestic economic data released today pointed to a slump in the real economy and worsening export market conditions. South Korea's industrial output fell a seasonally adjusted 2.2% in August from July, a deeper decline than expected. The current account balance hit its biggest deficit on record in August. The current account deficit reached a 12-year high of US$4.71 billion in August compared to a revised $2.53 billion deficit in the previous month. Additionally, the business survey index for manufacturers' expectations declined to 78 for October compared to 79 in the previous month, according to the Bank of Korea.

The Philippines stock exchange declined by 1.45% after the US House of Representatives rejected a $700-billion bailout plan for the financial sector. However the drop was much lower than the session's opening which saw the Philippines stocks tumbling as much as 155.81 points or 6% while the all-share index plummeting 76.6 points or 4.6502 %.

The benchmark index PSEi lost 37.93 points or 1.45 % at 2,569.65 while the all-share index shed 26.0 points or 1.80% to 1,622.25. Losers trampled gainers, 95 to 24, while 30 stocks were unchanged. Volume traded reached 3.617 billion valued at P3.033 billion.

In India, the BSE 30-share Sensex closed up 264.68 points or 2.10% to 12,860.43. The index shed 442.2 points at the day's low of 12,153.55, hit in early trade, its lowest level in two years. The Sensex rose 368.25 points at day’s high of 15,964 hit in mid-afternoon trade.

The Reserve Bank of India said the country's second largest lender, ICICI Bank has sufficient liquidity, including in its current account with the central bank, to meet the requirements of its depositors. The RBI added that it is monitoring the developments and has arranged to provide adequate cash to ICICI, adding that ICICI and its overseas subsidiary banks are well capitalized. The central bank's statement followed speculation about the bank's financial strength.

In addition the Securities & Exchange Board of India (Sebi) chairman C B Bhave today, 30 September 2008, said he did not have concerns that institutional investors were short-selling stocks and added that no change in the rules governing short selling was expected. The market surveillance system is already in place, Bhave said.

Singapore's Strait Times Index closed flat at 2,358 as Singapore's import and export price fell by 1.2% and 2.3% respectively in August 2008 over the previous month, due to lower oil prices.

Elsewhere, Taiwan's Taiex, which slid more than 6% earlier in the session, ended down 3.6% at 5,719.28, as trading resumed after a holiday; Malaysia's KLCI closed flat at 1,018. On the economic front, Malaysian producers price index, which is designed to measure the changes in the price of commodities, charged by domestic producers and those paid by importers for importing goods into Malaysia, increased by 11.33% in the month of August 2008.

In other regional market, European shares moved off lows in a volatile session, with miners clawing back some ground lost in the previous session, as investors started to hope that a $700 billion U.S plan to shore up financial markets will eventually be approved.

In the opening trade, the U.K. FTSE 100 index lost 0.6% to 4,791.68, the German DAX 30 index fell 1.2% to 5,739.19 and the French CAC-40 index declined 0.6% to 3,934.34. At 10.53 GMT, the U.K. FTSE 100 index recovered a bit as it was down by 0.15% to 4,811.52, the German DAX 30 index lost 1.1% to 5,743.80 and the French CAC-40 index declined 0.1% to 3,949.08.

Looking ahead, the Conference Board will release the results of its consumer confidence index for the month of September. The National Association of Purchasing Management – Chicago will also release its index of business conditions in the Chicago area. The purchasing manager’s index is expected to fall to a reading of 53.0 in September after rising to 60.2 in August. In Fed Speak, Atlanta Federal Reserve Bank President Dennis Lockhart is scheduled speak Tuesday afternoon about the US economic outlook in New Orleans, Louisiana.