Asian Market Support Stimulus With Surge

Sydney rebound on stimulus While Nikkei neglect stimulus

Stock markets in Asian region closed mostly higher on Tuesday 3 February 2009, despite of lackluster performance on Wall Street overnight and stimulus measures in Japan and Australia to stabilize markets and support their economies. The Bank of Japan announced to buy about 1 trillion yen ($11.2 billion) in corporate shares held by banks, while the Reserve Bank of Australia announced a $ 26 billion fresh spending to help the country's resources-based economy accompanied by 100 basis point rate cut from Reserve Bank of Australia taking the interest rate to 3.25%.

Stocks at Wall Street ended on a mixed note trimming some of its early losses after data showed a smaller-than-expected contraction in the manufacturing sector. The Dow Jones Industrial Average finished down 64.11 points, or 0.8%, to 7,936.75. The S&P 500 gained half of a point to stand at 825.43, and the Nasdaq Composite added 18.01 points, or 1.2%, to 1,494.43.

Among major economic reports for the day, January ISM manufacturing data came in a better-than-expected 35.6 after coming in at 32.9 in the prior month. In a separate report, personal spending data showed that consumer spending remained under severe constraint pressed by rising unemployment, tight credit and declining home prices, and swooning asset portfolios. Personal spending in December was down 1%. In another release construction spending in December fell 1.4%. Spending was down 1.2% in the prior month.

In the commodity market, crude oil rose in New York on speculation that OPEC, led by Saudi Arabia, cut its output in January to avoid a supply glut and bolster prices.

Crude oil for March delivery gained as much as 69 cents, or 1.72%, to $40.77 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $40.77 a barrel at 10:40 a.m. London time. Yesterday, futures fell $1.60, or 3.8%, to $40.08, the lowest settlement since 20 January 2009.

Brent crude oil for March settlement rose as much as 79 cents, or 1.80%, to $44.61 a barrel on London’s ICE Futures Europe exchange. The contract yesterday declined $2.06, or 4.5%, to settle at $43.82 a barrel.

Gold prices retreated 70 cents an ounce, or 0.08%, to $902.10 in Asian electronic trading on Tuesday after the most active February Comex gold contract erased $21.20 an ounce, or 2.3%, to $907.20 by the close of New York trading on Monday as investors took profits and lightened safe-haven trades.

In the currency market, the U.S. dollar strengthened against the Australian dollar, New Zealand dollar, South Korean won, Philippines peso, Indonesian Rupaih Singapore dollar, while it weakened against the, Hong Kong Dollar, Chinese Yuan, New Taiwan Dollar and Indian Rupee.

In late Tokyo trades, the Japanese yen strengthened against the dollar. The Japanese yen was quoted at 88.4750 against the US dollar, down from Friday’s quote of 89.4600 yen.

The Hong Kong dollar was trading at HK$ 7.7545 against the dollar. Actually The Hong Kong dollar is pegged at HK$ 7.8 to the U.S. dollar but can trade between HK$ 7.75 and HK$7.85 to the U.S. dollar.

In late Sydney trades, the Australian dollar was trading at US$0.6346 down from Monday's close of US$0.6315.

In late Wellington trades, the kiwi ended the day at US50.97c from US50.33c yesterday having risen just above US51c following the RBA decision. A large interest rate cut by the Reserve Bank of Australia late this afternoon helped push the New Zealand dollar above US51c, well above last night's six-year low.

In late Seoul trades, the South Korean won was trading at 1,389.70 won to the U.S. dollar in early trades, down 1.20 won from Monday's close of 1,390.40 won.

Coming back in Asian equities the stock markets in Japan, Hong Kong, Indonesia, Malaysia and Philippines closed the day on a lower note while China, Taiwan, South Korea, Australia, New Zealand, Thailand, India, Singapore, closed the day on a higher note.

In Japan, the equity markets experienced the volatile trading session as government’s efforts to stimulate economy failed to cheer the market. After opening lower, Nikkei finished the session lower in seesaw trade, with losses in banks and financials after a media reports that the Mitsubishi UFJ Financial Group will post a loss for the April-December period and slash its annual forecasts as well as dismal economic news.

The market recouped early losses as bargain hunters chased recently battered shares, and markets began the afternoon session upbeat after the Bank of Japan announced a plan to buy up to 1 trillion yen (11.17 billion dollars) of shares held by commercial banks through April 2010, but gains were erased in last hour of trading on worries over pessimistic earnings outlooks of Japanese firms.

The Nikkei 225 Stock Average index erased 48.47 points, or 0.62%, to 7,825.51, while the broader Topix rose 4.06 points, or 0.52%, to 774.

On the economic front, the Bank of Japan said Japan’s monetary base increased in January by 3.9% to 93.5049 trillion yen or $1.046 trillion over its level of one year earlier. Meanwhile, the current account deposits rose 41.8% in January following an increase of 14.7% in December.

The Ministry of Health, Labor and Welfare said the value of Japan’s total cash earnings was down 1.4% in December. Contractual cash earnings plummeted 1.0%, scheduled earnings by 0.2%, non-scheduled earnings by 11.2%, and special cash earnings by 1.7% on year in December.

In Mainland China, the regional indices extended gains for second consecutive day, on expectations of government stimulus packages for industrial sector to revive the slumping economy. Market gains are also buoyed on hopes of fresh measures to boost the Chinese economy after Premier Wen Jiabao said that Beijing is considering adding to its previously announced $585 billion fiscal package. The benchmark Shanghai Composite Index rose 49.12 points, or 2.44%, to 2,060.80.

In Hong Kong, the market erased morning gains to finish the session lower, with loses in exporters and property developers on concern a slowing global economy will dent demand and dismal home loan data overshadowed gains in financials and industrial sector on expectations of Beijing stimulus packages to revive the slumping economy. The Hang Seng Index tumbled 84.60 points, or 0.66%, to 12,776.89, while the Hang Seng China Enterprise Index rose 48.12 points, or 0.7% to 6,960.11.

In Australia, the stock market finished the session higher, after the Australian government’s announced A$42 billion fiscal stimulus measures and an upbeat profit forecast from Commonwealth Bank. After opening on a positive note, the market trimmed most of morning gains after the RBA cut the interest rate to 3.25% from 4.25% in an effort to lure more borrowers into the housing market. The benchmark S&P/ASX200 spurted 11.30 points, or 0.32%, to 3,508.7, while the broader All Ordinaries added 5.60 points, or 0.16%, to 3,449.10.

On the economic front, the government of Australia unveiled a second stimulus plan of A$42 billion (US$26.5 billion) into grants and infrastructure projects over the next three years to shield the economy from the global downturn. Treasurer Wayne Swan said A$28.8 billion would be targeted at infrastructure, schools and housing, while A$12.7 billion would be provided as cash payments for low and middle-income earners.

The Australian Bureau of Statistics said in a report that Australia seasonally adjusted goods and services trade surplus of A$589 million in December. Seasonally adjusted goods and services imports fell A$421 million or 2%, which included a decrease of 45% in the non-monetary gold import category.

In New Zealand, equity market inched up slightly on Tuesday. The benchmark index that had dipped yesterday after gaining for five consecutive sessions, on concerns after the treasury of New Zealand reported that the country’s economy will stay in recession at least until the end of March this year and a worsening global outlook is adding to the risk of a steeper slowdown

The benchmark NZX50 rose slightly by 0.32% or 8.791 points to close at 2780.287. However, the NZX 15 inched down 0.03% or 1.309 points to 5125.494.

Stock markets in South Korea followed the regional trend giving up yesterday’s losses ending the day on a positive note. The surge was lead by the gains in banking and technology sector stocks. Shipbuilding stocks also supported the gains. The regional market also bucked the mixed finish on Wall Street. The Korea Composite Stock Price Index gained 16.25 points or 1.42% closing the day at 1,163.20.

On the economic front, the Bank of Korea said that South Korea's foreign exchange reserves rose for the second straight month in January and totaled $201.74 billion, up $520 million from a month earlier.

Meanwhile, the International Monetary Fund lowered its forecast for the South Korean economy and said that the economy will shrink 4% in 2009 due to weak domestic demand and exports amid the global economic slump. However, the IMF said that Asia's fourth-largest economy will likely turnaround and is expected to grow 4.2% in 2010.

In Taiwan the stock markets grip up yesterday’s gains by closing the day at two week high following a rally in DRAM stocks such as ProMOS rallying on hopes the struggling firm was close to raising new loans to pay off debts. The main Taiex share index jumped 112.83 points or 2.65% at 4,372.81- the highest closing since 14 January 2009 when marked closed at 4.521.47.

In Philippines, the stock market gave away yesterday’s gain, closing the day lower, as uncertainty prevailed among the investors by more bleak economic news that pointed to a deepening slump in the economy. The benchmark index declined 0.40% or 7.44 points to 1,826.13, while the all share index fell 0.33% or 4.03 points to 1,193.11.

On the economic front, the socioeconomic Planning Secretary Ralph G. Recto sees the Philippines incurring a wider deficit of about P114 billion this year as the government will have to spend more for economic pump-priming. The government originally expected the deficit to hit P40 billion after which the deficit projection was raised to 102 billion pesos. However as the country requires additional expenditure due to increasing effects of global economic downturn, the government has increased it’s targets for the fiscal deficit.

In Singapore, the stock market finished the session higher, as the bargain hunter stepped in after a two-day losing streak, with gains in manufacturing and construction sector on expectations for Beijing aid for the industrial sector and stimulus measures in Japan and Australia to support the economy from downturn. The benchmark Straits Times Index added 6.63 points, or 0.39%, to 1,711.92.

In India, the key benchmark indices retreated from its fresh intra-day high attained in mid-afternoon trade led by gains in oil & gas, FMCG and banking shares. As per the provisional figures, the BSE 30-share Sensex was up 82.60 points, or 0.91%, to 9,149.30. The S&P CNX Nifty added 0.62%, to 2,783.90.

Elsewhere, Malaysia's Kula Lumpur Composite index was down 0.54% or 4.78 points to 879.67, while Indonesia’s Jakarta composite decreased by 6.31 points or 0.48% to 1304.33. In Thailand, the Thai Stock exchange gained 2.84 points or 0.66% to 430.69.

In the other regional market, European shares advanced, with telecom stocks among the top advancers after Vodafone Group reassured on revenue trends. On a national level the German DAX 30 index rose 0.8% to 4,307.03 while the French CAC-40 index advanced 0.7% to 2,950.04. The U.K. FTSE 100 index rose 0.2% to 4,084.97,