Asian Markets Consolidate Gains

Strong Gains in Resource Sector And Overnight Rebound on Wall Street Supports Momentum

The stock markets across the Asian region consolidated their gains closing on higher side for the second consecutive day by taking a cue from overnight rebound in Wall Street on the back of strong gains in the resources sector and comments from Federal Reserve Chairman Ben Bernanke and the White House in support of a second economic stimulus package. The Dow Jones Industrial Average ended the day up by 413 points, to 9,265. The Nasdaq Composite Index finished higher by 58 points at 1,770. S&P 500 finished higher by 44 points at 985.

In commodity market, crude oil prices eased in late Asian deals despite hopes of a production cut by OPEC this week - the first time in almost two years and the U.S. government is considering further action to boost the economy.

At 8:58 GMT, oil was quoted at $73.50 a barrel, down $0.75 after York's main contract, light sweet crude for delivery in November, rose by $2.40 to close at $74.25 dollars a barrel on yesterday.

In currency trading, the U.S. dollar weakened to the lower 101-yen levels in late Tokyo deals from the lower 102-yen range in early trade and late Monday.

The Australian dollar responded positively to the strength in global shares, rising above US$0.70 in the morning session, but lost ground after the minutes of the Reserve Bank of Australia's board meeting earlier this month suggested that further interest rate cuts were possible in coming months. In late local trade, the Aussie was buying US$0.6953, down from Monday's close of US$0.6993-0.6996.

The New Zealand dollar gained as appetite for riskier assets such as high-yielding currencies improved amid firmer global equity markets. The CPI data released today had only a minimal effect on the kiwi, as the market anticipates a 100 basis point interest rate cut by the Reserve Bank of New Zealand on Thursday. The kiwi finished the domestic session at US$0.6172-0.6177 compared to US$0.6119-0.6122 in late local trade on Monday.

The South Korean won fell against the greenback, as dollar demand by importers and foreign stock investors remained strong. The won finished the local session at 1,320.1 a dollar, down from yesterday's close of 1,315.0 won.

The Taiwan dollar closed the morning at NT$32.647 to the US dollar, compared with the previous close of NT$32.580.

Coming back in equities, Japan's Nikkei index rose more than 3% and Australia's All Ordinaries jumped nearly 4%, while Hong Kong's Hang Seng declined 1.8%, South Korea's KOSPI lost 1% and China's Shanghai Composite index dropped 0.8%.

The Japanese stock market closed sharply higher, extending its gains for a third consecutive session. The benchmark Nikkei 225 Index closed up 300.66 points or 3.34% at 9,306.25 after posting a gain of 3.6% on yesterday. The broader Topix Index of all First Section Issues gained 29.27 points or 3.16 to 956.64.

The Chinese stock market closed lower on profit taking after two sessions of gains. Financials and property stocks led the losers. Investors also exercised caution on concerns about the economy after China's growth slowed to 9% in the third quarter. However, agricultural stocks gained after the National Development and Reform Commission or NDRC said that the government will sharply raise investment in agriculture and accelerate the building of related infrastructure. The benchmark Shanghai Composite Index closed down 15.48 points or 0.78% at 1,958.53.

In Hong Kong, the Hang Seng Index struggled to stay in the positive territory after opening higher. The benchmark index closed down by 1.84% at 15,041.17, while the Hang Seng China Enterprises Index went down by 2.34% to 7,267.12.

The Australian stock market closed sharply higher for the second straight trading session on Tuesday. The market started off firm, extended its gains amid signs that the global credit crunch might be easing. The benchmark S&P/ASX 200 index closed up 160.2 points or 3.9% at 4,302.5, extending yesterday's 4.3% gains. The broader All Ordinaries index gained 152.7 points or 3.73% to close at 4,251.4.

On the economic front the according to the minutes of October 7 monetary policy meeting, the central bank's board noted that it saw increased risks to the nation's economy and hints that inflation would not get out of hand as it decided this month to reduce interest rates by a full percentage point. The board also said that while upcoming inflation figures would likely show an increase to around 5% for the year, the current staff forecast was for inflation to start to decline in 2009, and that weaker demand will probably mean inflation will fall faster than previously expected.

In other economic news, a report from the Australian Bureau of Statistics showed that new motor vehicle sales for September declined 0.4% from last month and 8.2% on year.

The New Zealand stock market closed sharply higher, extending its gains for the third consecutive trading session. The benchmark NZX 50 index closed up 62.10 points or 2.15% at 2952.20 after rallying nearly 3% on Monday. The broader NZX All Capital index advanced 53.53 points or 1.82% to finish at 2,993.66.

On the economic front, Inflationary pressures continued to scale new highs in New Zealand as the consumer price index soared at fastest pace in 18 years on soaring petrol prices. According to data released by the Statistics New Zealand, the consumer price index (CPI) increased 5.1% in the third quarter ended September 2008 over the corresponding period in the previous year. The annual rate has been the highest since the second quarter of 1990 quarter. Over the second quarter, the consumer price index rose 1.5%.

Meanwhile, Statistics New Zealand said that food prices rose 0.6% in September, driven mainly by a 3.7% jump in the prices of meat, poultry and fish.

The South Korean stock market closed lower, reversing early gains, as investors turned doubtful about the effectiveness of the government's financial stabilization package. The market started off stronger, mirroring a pickup in U.S. markets, but lost ground over the course of the trading session, dipping as much as 2.1% at one point. The benchmark Korea Composite Stock Price Index or KOSPI eventually closed down 11.53 points or 0.95% at 1,196.1 after opening nearly 2% higher.

On Sunday, the government unveiled sweeping measures aimed at providing three-year state guarantees for banks' foreign debts worth up to US$100 billion and injecting $30 billion into dollar-starved banks and companies.

In Malaysia, the shares advanced after the country's finance minister, Najib Razak, announced measures to attract foreign investment, and support the stock market. The KLSE Composite index rose 0.8% to 916.78.

In Philippines, the stock market advanced 2.61%, recording its first gain in five days as global investors praised the U.S. Federal Reserve's plan for a second stimulus package to aid the U.S. economy. The benchmark index PSEi scaled up 2.61% or 53.86 points to 2,116.74, after falling 1.7 % yesterday.

In India, the key benchmark indices surged in mid-afternoon trade to hit fresh intraday highs. However the market soon came off from the day’s high. At 15.46 IST the BSE Sensex was up 460.30 points or 4.50%. The S&P Nifty was up 3.91% trading at 3244.80.

On the economic front, the monetary board of Philippines approved on 17 October the opening of a US dollar repurchase agreement (repo) facility to support the orderly functioning of the financial system as an effective channel of monetary policy. The US dollar repo facility is expected to augment dollar liquidity in the market to help address any temporary market tightness at this time. In turn, this will help ensure the ready availability of credit for imports and other qualified funding requirements. For this facility, the Monetary Board approved the use of foreign-denominated sovereign debt securities (ROP) as collateral for loans availed.

Elsewhere, Thai Set increased by 0.56% or 2.69 points to close at 479.64 while Indonesia’s Jakarta Composite closed the day with a gain of 13.21 points or 0.93% closing at 1440.15. Singapore’s Strait Times was trading lower at 1,920.79 – down by 0.95%.

In other regional markets, European shares moved higher, with industrials advancing and French banks performing well amid moves by the French government to shore up the sector.

The German DAX 30 index rose 0.7% to 4,868.54, while the U.K. FTSE 100 index declined 0.1% to 4,279.92 as several U.K. lenders weakened, with HSBC Holdings down 4.3% and Royal Bank of Scotland down 5.3%. The French CAC-40 index climbed 2.1% to 3,519.56, outperforming other national indexes.