Asian Markets Remain Cautious On Concerns Of Bailout Plan

Hong Kong, Sensex Lead the Regional Fall As Markets In China, Malaysia, and Taiwan Closed For Holiday

The stock markets across the Asian region closed lower, led by Hong Kong and India, ahead of a vote in both the Senate and the Congress on the revised $700 billion rescue package agreed by the U.S. lawmakers. On Friday, U.S. stocks ended mixed after gains in big financial companies lifted the Dow Jones Industrials Average more than 120 points, while worries about smaller banks and parts of the technology sector weighed on the market. The Dow closed up 121.07 points or 1.1 %at 11,143.13 and the S&P 500 closed up 4.09 points or 0.3 % at 1,213.27, while the Nasdaq closed down 3.23 points or 0.2 %at 2,183.34.

Oil extended its decline, pressured by a rise in the U.S. dollar, on optimism ahead of a vote on the U.S. financial sector bailout package. By 3:49 a.m. ET, oil was quoted at $103.86 a barrel, down $3.03 from Friday's close.

In currency market, the U.S. dollar gained against the yen, but gave away some of the gains in late Tokyo deals. The U.S. dollar dipped to the lower 106-yen levels in late Tokyo deals from the upper 106-yen levels in early Tokyo deals. The dollar closed in the upper 105-yen zone late Friday in Tokyo. The U.S. dollar was quoted at 106.24-106.26 yen, up 0.90 yen from Friday's close of 105.95-106.05 yen

The Australian dollar closed weaker, finishing below US$0.83 for the first time in more than a week as U.S. lawmakers prepared to vote on a revised bailout package for Wall Street. The Aussie finished the local session at US$0.8218-0.8221, down from Friday's close of US$0.8318-0.8322.

The New Zealand dollar finished a mixed session weaker at US$0.6858, compared to US$0.6864 in early local deals and US$0.6876 late Friday.

The South Korean won fell more than 3% to near 5-year lows against the dollar. The won fell to as low as 1,199.8 a dollar, its weakest since December 29, 2003, before finishing the local session at 1,188.6-1,189.0 a dollar on talk of dollar-selling intervention, compared to Friday's domestic close of 1,160.5 a dollar.

The Philippines peso weakened further as it closed at 46.990 against the dollar compared to Friday's domestic close P46.745 a dollar.

Coming back to Asian equities, the investors turned cautious on concerns about the effectiveness of the plan and also on worries about the health of financial institutions in Europe. Meanwhile, the stock markets in China, Malaysia, and Taiwan remained closed on account of public holidays.

The Japanese stock market pared early gains to close lower on Monday, extending losses for a third day. The market started off higher, after the White House and congressional leaders struck a deal Sunday on a bill to resolve the ongoing financial crisis, but lost ground as investors turned cautious ahead of a vote in the U.S. House of Representatives as early as today. The benchmark Nikkei 225 index closed down 149.55 points or 1.26% at 11,743.61 and the broader Topix index of all First Section issues on the Tokyo Stock Exchange shed 20.02 points or 1.74% to finish at 1,127.87.

On the economic front, Japanese retail sales rose 0.7% in August from a year earlier, rising for the 13th straight month, the Ministry of Economy, Trade and Industry said. In July, retail sales rose by a revised 2.0% on year. Sales at department stores and supermarkets fell, for the fifth straight month, by 2.2% on year after adjustment for the change in the number of stores.

The Hong Kong stocks were battered today as property players tumbled after HSBC Holdings' local banking unit raised mortgage rates by a half-point because of rising funding costs. Ping An Insurance (Group) Co. slumped after three European countries were forced to rescue Fortis, in which the insurance major has a stake. The Hang Seng Index ended 4.3% down to 17,880.68 and the Hang Seng China Enterprises Index slumped 6.6% to 8,955.26.

The Australian stock market closed lower, extending its losses for the third consecutive trading session. After opening on a firm note following, the market lost ground as investors turned cautious ahead of a vote on the rescue package in both the Senate and the Congress. The benchmark S&P/ASX 200 index closed down 97.4 points, or 2.0%, at 4,807.4, while the broader All Ordinaries index lost 95.4 points, or 1.9%, to finish at 4,839.2.

The New Zealand stock market closed slightly higher on Monday, ending a two-day losing streak. The market started off higher, encouraged by news that U.S. lawmakers have tentatively agreed to a US$700 billion rescue plan for the ailing U.S. financial sector, but pared most of its early gains in the after noon session following weakness in other regional markets. The benchmark NZX 50 Index closed up 0.95 point or 0.03% at 3,188.51 and the broader NZX All Capital Index added 3.46 points or 0.11% to finish at 3,210.0.

On the economic front, New Zealand's annual trade deficit contracted in August, according to data released by Statistics New Zealand. For the month of August, the deficit was NZ$750 million, the smallest August deficit in dollar terms since 2004. The monthly deficit through July 2008 was a downwardly revised NZ$808.1 million. The nation's trade balance for the year through August was a deficit of NZ$4.3 billion.

Meanwhile, the value of New Zealand's M3 money supply rose 7.2% on year in August to NZ$205.23 billion, the Reserve Bank of New Zealand said.

The South Korean market closed lower as steep falls in the won weighed on banks. The Korea Composite Stock Price Index or Kospi closed down 19.97 points or 1.35% at 1,456.36 after rising to near 1,500 points in early trade.

The Philippines stock exchange went up for a fourth successive day though the quantum of the up move was rather limited as investors remained cautious while waiting for the final approval of a US government plan to buy bad debts from troubled financial institutions. The benchmark PSEi ended up 0.39% on 29 September 2008, as the weakness in the Service sector hovered over the market and the early gains were given away in the closing hours of the session.

The benchmark index PSEi closed up 10.35 points or 0.39% to 2,607.58.While the all-share index leaped 12.09 points or 0.73% to 1,648.30. Three of the eight indices, however, went down. Industrial stocks gained the most, advancing by 53.88 points or 1.75% to 3,119.1 while the service sector led today's losers, followed by property stocks and mining and oil indices.

In India, the BSE Sensex plunged to 52-week low. Sensex was down a massive 644.38 points in the afternoon. According to the provision closing the Sensex closed down by 506.43 points or 3.87% to 12595.75.

Elsewhere, Singapore's Straits Times index was trading down by 2.1% at 2,316.34 while the Indonesia's Jakarta composite index was down 0.74% at 1,832.51.

In other regional market, European shares headed back towards three-year lows, with banks falling sharply as news of bailouts for Fortis and Hypo Real Estate and the nationalization of Bradford & Bingley highlighted current turmoil in the sector, while details of a U.S. plan to shore up the financial sector received a cool reception.

In the opening trade, the U.K. FTSE 100 index dropped 2.5% to 4,962.97, the German DAX 30 index fell 2.8% to 5,896.35 and the French CAC-40 index dropped 2.7% to 4,051.29. At 10.53 GMT, the U.K. FTSE 100 index fell further 3.3% to 4,920.62, the German DAX 30 index lost 2.8% to 5,891.05 and the French CAC-40 index declined 3.1% to 4,036.34.

On the economic front, Euro zone economic sentiment weakened to 87.7 in September from 88.5 in August. The commission said the reading reached its lowest since 2001. However, the index stood above the expected reading of 87.2.

The overall decrease in sentiment was characterized by a fall in confidence in industry, services and construction. The industrial confidence index stood at -12, down from -9 in August. The indicator measuring services confidence fell to zero and that for the construction sector slid to -16.

At the same time, consumer confidence remained unchanged at -19 and retail trade confidence rose in September to -8 from -10. Separately, the Commission said the business confidence index slid to 0.79 in September from minus 0.28 in the prior month. The reading for August was revised from minus 0.33.

Looking ahead the day is scheduled to release core personal consumption expenditure index for month of August, which will be followed by the data on personal income and expenditure. In the late evening we have building permits details from New Zealand. Japan’s statistical house will release its monthly figures of unemployment and industrial production for the month of August.