Asian Markets Alight The Flight Of Safety

Nikkei Extends The Gains While Other Regional Markets Give Up

The stock markets across the Asian region closed lower on profit taking from recent rallies. Wall Street's decline overnight, amid concerns that the government measures won't be sufficient to prevent the U.S. economy from entering a deep recession, prompted investors to sell stocks. The major averages all ended the session in negative territory, although the Nasdaq posted a much steeper loss. The Nasdaq closed down 65.24 points or 3.5 percent at 1,779.01, while the Dow closed down 76.62 points or 0.8 percent at 9,310.99 and the S&P 500 closed down 5.34 points or 0.5 percent at 998.01.

Oil prices held steady in the Asian session after the contract for November delivery fell overnight in U.S. trading. The crude oil fell below $78 a barrel on skepticism that a U.S. government plan to invest $250 billion in banks will be sufficient to bolster economic growth and spur fuel demand. Crude oil for November delivery fell as much as $1.18, or 1.5%, to $77.45 on the New York Mercantile Exchange. It traded at $77.30 a barrel at 11.24 a.m. London time.

In currency market, the Japanese yen rose against the dollar as investors turned risk averse. The U.S. dollar held steady in the upper 101-yen levels. The dollar was quoted at 101.82-101.87 in late Tokyo deals, down 0.64 yen from Tuesday's close of 102.46-102.47 yen in Tokyo.

The Australian dollar closed weaker as investors shied away from riskier assets following Wall Street's decline overnight. The local unit also lost ground after a non-voting member of the U.S. Fed's monetary policy committee questioned the need for more U.S. interest rate cuts. The Aussie finished the local session at US$0.7005-0.7009, down one U.S. cent from Tuesday's close of US$0.7106-0.7111.

The New Zealand dollar closed weaker following capital outflow from the local stock market. The kiwi finished the session at US$0.6170, down from US$0.6203 in early trade and US$0.6228 late Tuesday. The local unit rose to US$0.6350 overnight after the U.S. government pledged to pour US$250 billion into major banks.

The South Korean won fell against the U.S. dollar. The won ended the session at 1,239.5 a dollar, down from Tuesday's local close of 1,208.0 a dollar. The local unit pared some of the gains it logged for the past four sessions.

The Taiwan dollar ended the morning session at NT$32.396 to the US dollar, compared with the previous close of NT$32.388.

Coming back in Asian equities, the Hong Kong's Hang Seng index plunged 5% and India's Sensex fell nearly 6%. However, Japan's Nikkei index rebounded in late trade to end in positive territory.

The Japanese stock market closed higher, extending yesterday's rally. The market opened lower as investors locked in profits from the largest single-day gain in its postwar history, but rebounded in late trade on bargain hunting. The benchmark Nikkei 225 index closed up 99.9 points, or 1.1%, at 9,547.5, but the broader Topix index of all first-section issues closed down 0.8 point or 0.1% at 955.51.

On the monetary front, Japan’s central bank withdrew 1 trillion yen (9.94 billion dollars) from the money markets as interest rates fell. It was Bank of Japan’s first fund-draining operation since it began liquidity infusions on 16 September 2008.

In economic front, the Ministry of Finance said that the current account balance for Japan was having surplus of 988.8 billion yen in non-seasonally adjusted terms for August 2008, but the size of the surplus fell by 52.5% from a year ago, marking the sixth consecutive month for shrinking current surpluses. The balance of trade in goods and services posted a deficit of 327.6 billion yen, while the merchandise trade showed a deficit of 236.0 billion yen.

The Imports climbed up 20.2% from a year earlier, rising to 6957.0 billion yen. It marked an increase of 18.9% to 7059.7 billion yen as compared to the last month. Exports rose 0.9% as against the same period a year earlier with a surplus of 6721.0 billion yen. As compared to the previous month exports rose 8.7% to 7292.0 billion yen.

In another data release, the Ministry of Economy, Trade and Industry released the revised report cementing the fact that Japan's industrial production had continued to decline at a fastest pace in 7-½ years, accentuating the headwinds as the world's second-largest economy edges toward the brink of recession.

Industrial Production in August decreased 3.5% from the previous month - unchanged from the previous estimate, showing a decrease for the first time in two months. The monthly decline was the largest since January 2001 when it fell by 4.2%. On the year the production declined by 6.9% in August - unchanged from preliminary estimates.

The Chinese stock market closed lower, extending losses for a second consecutive trading session. Worries about corporate earnings, due to slowing economic growth, dented investor sentiment. The Shanghai Composite Index closed down 22.65 points or 1.12% at 1,994.67.

On the economic front, China's money supply growth slowed in September for the fourth month. M2, the broadest measure of money supply, rose 15.3% to 45.3 trillion yuan from a year earlier, according to the People's Bank of China. M2 gained 16% in August.

In Hong Kong, the stock index interrupted two days of winning streak to finish the session 5% lower as investors locked in profit on tracking negative cues from Wall Street overnight amid concerns that the US government measures won’t be enough to prevent the economy from entering into a deep recession. The Hang Seng Index tumbled 4.96% to 15,998.30, with selling intensifying in afternoon trading after European markets opened lower. The Hang Seng China Enterprises Index fell 6.4% to 7,894.06.

In Australia also the stock market closed lower, ending a two-day winning streak as investors locked in profits after the key index posted steep gains in the previous two trading sessions. The benchmark S&P/ASX 200 index closed down 35.2 points, or 0.81%, at 4,300.0 and the broader All Ordinaries index fell 39 points, or 0.9%, to 4,272.5.

On the economic front, a private sector forecast of Australia's economic activity showed an expectation of annualized growth of 2.5% in August. The Westpac Bank-Melbourne Institute leading index reading was down from expected growth of 3.3% forecast in July's survey, and well below the long-term trend of 4.0% annualized growth. The coincident index, which measures current activity, increased 0.4% on month in August to 2.0%, also below the long-term trend of 3.7% on-year growth.

The New Zealand stock market ended the session on lower side, giving away a portion of the 5.65% gains that it posted on yesterday. After a weak start, tracking Wall Street's decline overnight, the market extended its losses as Telecom announced plans to spend NZ$574 million on a new mobile network. The benchmark NZX 50 index closed down 44.33 points, or 1.53%, at 2,904.64 and the broader NZX All Capital index shed 38.98 points or 1.32% to 2,947.44.

In South Korea, the equity bourse ended 2% lower with steel makers and banking issues leading the retreat from yesterday's sharp gains, as worries about a weakening global economy and its impact on consumer sentiment deepened. The Korea Composite Stock Price Index ended down 2.00% at 1,340.28 points after closing 6.1 percent higher on Tuesday, its biggest one-day rise since February 2002.

On the economic front, the South Korean jobless rate fell to 3% in September, after staying at 3.1% in August and July, the National Statistical Office announced Wednesday. On a seasonally adjusted basis, the unemployment rate was 3.1%, down from 3.2% in August. The number of employed persons increased 112,000 in September compared to around 159,000 in the prior month.