Asian Markets Step In Wall Street’s Shoes

Markets In Philippines, New Zealand Plunge By More Than 3%

The stock markets across the Asian region were trading sharply lower, led by banks, after Wall Street plunged to a three-year low overnight amid concerns that a government bailout of troubled American International Group might not stem the financial turmoil. The U.S. government's bailout of the beleaguered insurer American International Group failed to allay investor concerns about further fallout from the credit crunch and the U.S. stocks finished at a three-year low on yesterday. The Dow Jones Industrial Average plunged 4.1% and the tech-dominated Nasdaq composite index nose-dived 4.9%.

Crude oil prices held mostly steady in the Asian session, trading at $96.83 a barrel, down $0.34, by 5:22 a.m. ET. The contract for October settlement shot up $6 a barrel Wednesday, on fears of a spreading crisis in the U.S. financial sector, and settled at $97.16 a barrel on the New York Mercantile Exchange.

In the currency market, the U.S. dollar traded in the lower 105-yen levels in late Tokyo deals, up from the upper 104-yen range in early trade. The dollar closed Wednesday's session in the lower 105-yen levels. The dollar met with broad selling on heightened fears about the U.S. financial sector.

The South Korean won finished at 1,153.3 a dollar; down 37.3 from Wednesday's close of 1,129.9 a dollar. Foreign purchased the dollar after dumping shares in the local stock market.

The Australian dollar ended the local session slightly weaker amid a surge in the price of gold and weaker financial markets. The Aussie closed at US$0.7986-0.7990, down from Wednesday's close of US$0.80110-8015.

The New Zealand dollar strengthened against the U.S. dollar amid increasing concerns about the recent developments in the U.S. financial sector. The kiwi was quoted at US$0.6640-0.6650 in late local trade, up from Wednesday's close of US$0.6583-0.6589.

Coming back in Asian equities, the Japanese market closed sharply lower, but off the day's low, reversing yesterday's gains. The key Nikkei 225 index slid 2.2% to a three-year closing low, with financial stocks tumbling on the back of growing crisis in the U.S. credit markets. The benchmark Nikkei index shed 260.49 points to end at 11,489.30, its lowest close since June 2005. The broader Topix lost 23.75 points or 2.1% to finish at 1,097.68.

On the economic front, the indices of tertiary industry activity in Japan increased 1.2% in July to a seasonally adjusted score of 110.6 from previous month, while nationwide department store sales continued to decline for the sixth month in a row in August as fears of economic slowdown and higher prices reduced household spending. Japan Department Stores Association said that nationwide department store sales decreased 3.1% on year in August, quicker than a 2.5% fall seen in July. Meanwhile, machine tool orders fell 13.9% on year in August.

The Bank of Japan cut its assessment on business investment in its monthly economic report, citing the impact of weaker corporate profits. The central bank reiterated that economic growth was sluggish due to higher energy costs and weakening export growth, keeping its overall assessment unchanged.

The Chinese stock market closed lower, extending its losses for the third consecutive trading session. The benchmark Shanghai Composite Index closed down 33.21 points or 1.72% at 1,895.84, recovering substantially from the day's low of 1,802.33.

Hong Kong stocks went on a wild roller-coaster ride before ending little changed, with the session highlighting investor worries about a raging global financial crisis as well as anguish over beaten-down valuations.

In a stunning turnaround, the benchmark Hang Seng Index lost more than 1,350 points in the morning session to its lowest level in more than two years, only to claw back all of the lost ground and then some in the closing moments. The index, which lost 15.2% in the previous six sessions, finally ended 0.03% lower at 17,632.46.

On the economic front, Hong Kong's seasonally adjusted unemployment rate stood at 3.2% in June - August 2008, same as that in May - July 2008 which was the lowest level since early 1998. On the other hand, the underemployment rate also held stable at 1.9% in both periods.

In another data release, the volume of Hong Kong's total exports and imports of goods increased by 7.3% and 10.9% in July 2008, over a year earlier. Prices of total exports and imports of goods increased by 4.9% and 5.9% respectively.

The sharp recovery was aided by news that the Federal Reserve and other major central banks planned to inject hundreds of billions of dollars worth of liquidity into the financial system in a bid to thaw frozen short-term money markets.

The Australian stock market tumbled to close near three-year low, extending losses for the fourth consecutive trading session. The key index started off sharply lower, tracking Wall Street's slump overnight, and fell as much as 3% in intraday trading. However, bargain hunting emerged in late trade and the key index recovered some ground to finish 2.4% lower. Financial stocks tumbled on the back of persisting credit market concerns, but gold miners surged after the price of the precious metal recorded its biggest one-day gain in nine years on Wednesday.

The benchmark S&P/ASX 200 index gave away 114.9 points to end at 4,607.3, its lowest close since December 2005. The market has fallen 6% so far this week. Meanwhile, the broader All Ordinaries index fell 117.8 points or 2.5% to finish at 4,651.9.

On the economic front, an index measuring industrial trends continued to expand, but at a slowing pace in the third quarter, according to a survey by Westpac-ACCI. The index stood at 50.8, slowing down from 53.9 in the previous quarter. However, expectations for the fourth quarter are firmer, displaying seasonal strength, lifting the Expected Composite Index 1.0 point to 51.2. Meanwhile, the Reserve Bank of Australia said that it sold A$307 million in the forex market in August.

The New Zealand market plunged on, recording the biggest one-day fall in nearly six years. The market started off weak, tracking Wall Street's 4.1% drop overnight, and extended losses as the stock markets across the Asia-Pacific region slumped amid persisting credit jitters. The benchmark NZX index fell 111.0 points or 3.5% to close at 3,158.9 after rising 1.3% on yesterday. The broader NZX All Capital index shed 113.6 points or 3.6% to finish the session at 3,188.1.

The South Korean market closed sharply lower, reversing most of yesterday’s 2.7% gains. Persisting credit concerns overshadowed the economy's designation as a developed market by a global equity index compiler. The benchmark Korea Composite Stock Price Index or Kospi plunged 32.84 points or 2.3% to close the session at 1,392.42 after falling to an intra-day low of 1,366.88. South Korea's inclusion in the Financial Times Stock Exchange advanced market category also did not have a major impact on the market.

The Philippines stock market continued to freefall, after a slight recovery a day earlier, with the main index plunging at 4.25%. The market followed the regional trend which mirrored the overnight plunges on Wall Street as credit dried up and fears rose that more financial companies would fail.

The benchmark PSEi index lost 104.63 points to close at 2,352.37 points from Wednesday's finish of 2,457.00. Yesterday the PSEi was up by 1.45%. While the all-shares index fell 3.68 % to 1,502.15 points. The biggest drop was seen in the prorperty index, which shed around 6%.

In India, a coordinated effort from global central banks to ease a funding squeeze in money markets helped the key benchmark indices reverse sharp early losses and end in green. The Sensex snapped a seven-day losing streak, provisionally gaining 63.61 points. A $21.7-billion deal by British bank Lloyds TSB to prevent another UK victim of the credit crisis also helped ease investor jitters after US stocks hit a three-year low on Wednesday, 17 September 2008.

The BSE 30-share Sensex was up 63.61 points or 0.48% to 13,326.51 as per provisional closing. At the day’s high of 13,346.79 hit in mid-afternoon trade, the Sensex rose 83.89 points. The Sensex opened with a huge downward gap of 550.08 points at 12,712.82. At the day's low of 12,558.14 hit in early trade, the Sensex lost 704.76 points. The S&P CNX Nifty rose 35.70 points or 0.89% to 4,043.95.

Elsewhere, Taiwan's Taiex closed down 2.74% at 5,641.95; Singapore's STI closed at par with 2,419 on screen; Malaysia's KLCI closed down 1.13% at 991.66 and Indonesia's Jakarta Composite index closed up 1.0% at 1,787.67.

In the other part of the world, European shares moved higher in a see-saw session on Thursday morning, as investors bought up banks and miners, although central bank intervention in the money markets served as a reminder of the current stresses in the financial system.

Of national indexes, the U.K. FTSE 100 index rose 1.2% to 4,970.60, the German DAX 30 index advanced 0.4% to 5,881.42 and the French CAC-40 index rose 0.7% to 4,026.85, retaking the 4,000 level. At 11.38 GMT continued to gain further as U.K. FTSE 100 index increased by 1.84% to 5,002.70. The German DAX 30 index increased by 1.3% to 5,937.82, while the French CAC-40 index was up by 1.3% to 4,052.99.

On the economic front, British retailers saw a 1.2% monthly rise in sales volume in August and a 3.3% annual increase, the Office for National Statistics reported today. The largest contribution to growth came from textile, clothing and footwear stores, where sales saw a monthly rise of 4.1%, the ONS said.

Looking ahead for the day the weekly data on Jobless claims from US statistical house, which will be followed by the Philadelphia manufacturing survey for the month of September and also by the leading indicators for the month of August. From Canada we have series of data release, which will start with the leading economic indicators and will be followed by the wholesale sales for the month of July.