Asian markets closes mostly higher

Nikkei, Shanghai put up good gains while Seoul, New Zealand ends lower

Stock market in Asian region closed mostly higher on Thursday, 19 February 2009, as recent selling pressure eased and safe-haven buying of the dollar and gold subsided, but reminders of the global economic gloom and financial sector woes kept investors cautious.

On Wall Street, stocks ended almost flat, after oscillating between red and green for the entire day. President Barack Obama unveiled his administration's plans to reduce the number of foreclosures. The plan would reduce housing payments for some families to make them affordable, with the government and the lender subsidizing the difference. The Dow Jones Industrial Average ended higher by 3 points at 7,555, the Nasdaq closed lower by 2.6 points at 1,467 and the S&P 500 closed lower by 0.75 points at 788.

In the commodity market, crude oil traded below $35 a barrel in New York after an industry-funded report showed that U.S. stockpiles climbed amid falling fuel demand.
The American Petroleum Institute said yesterday that inventories rose 1.6 million barrels last week to 345.8 million barrels. Traders await the official release of the Energy Information Administration's weekly data, delayed by a day, which is expected to show another build in inventories.

Oil closed down $0.31 at $34.62 a barrel on the New York Mercantile Exchange on Wednesday, after hitting an intraday low of $34.13 and a high of $36.22. In the Asian session Thursday, crude was steady and unchanged at $35.99 in electronic trading at 05:38 a.m. ET.

Brent crude oil for April settlement was at $40.59 a barrel, up $ 1.04, on London’s ICE Futures Europe exchange at 5:59 a.m. E.T. It yesterday declined $1.48, or 3.6%, to $39.55 a barrel, the lowest close since 26 December 2008.

Gold prices remained well supported by the safe haven buying, which kept Gold on seven-week high levels. Gold for February delivery ended up $10.70, or 1.1%, at $977.70 an ounce on the Comex division of the New York Mercantile Exchange, the highest closing level for a front-month contract since 15 July 2008, when gold closed at the same price. In the Asian session Thursday, gold was little down at $975.30 in electronic trading at 5:39 a.m. ET.

In the currency market, the Japanese yen was quoted at 93.39 against the US dollar, easing a bit from Monday's 19-year high mark.

The Hong Kong dollar was trading at HK$ 7.7548 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 Sydney trades, the Australian dollar pulled away from recent two-week lows, drawing support from higher regional stock markets, although worries about problems facing the global banking sector capped gains. The Aussie closed at US$0.6331, up from Wednesday's close of US$0.6392.

In Wellington trades, the New Zealand dollar ended the day at US50.96c from its previous closing at US50.69c yesterday.

The Taiwan dollar continued to hover around the 51/2 year low level as the U.S. dollar strengthened for the 11th straight session The greenback closed the day at NT$ 34.675, after dropping to NT$34.699, the weakest level since June 2003.

The South Korea's currency declined to a three-month low against the U.S. dollar on Thursday as market jitters escalated over local banks' dollar liquidity conditions, dealers said. The local currency closed at 1,481 won to the greenback, down 13 won, or 0.88%, from the previous session's close, marking the eighth straight day of decline. The Korean currency reached its lowest level since 25 November 2008.

Coming back in equities, in Japan, the stock market traded slightly higher, in line with most of the Asian markets after a flat finish on the Wall Street. The Nikkei 225 Stock Average index increased 23.21 points, or 0.31%, to 7,557.65, while the broader Topix gained 2.33 points, or 0.31%, to 751.59.

On the economic front, Bank of Japan, at the Monetary Policy Meeting held today, decided by a unanimous vote to let the uncollateralized overnight call rate to remain at around 0.1%. Further, as expansion of the measures to facilitate corporate financing, the bank would facilitate special funds-supplying operations to facilitate corporate financing to ensure stable provision of funds with longer duration of 3 months at low interest rates. Outright purchases of CP will be conducted for an extended period and the duration of expansion in the range of corporate debt eligible as collateral was extended.

The bank says there is a possibility that the inflation rate will decline further if a downside risk to economic activity materialises or commodity prices fall. In this case, the risk of a decline in the medium- to long-term inflation expectations of firms and households warrants attention.

In Mainland China, the equities held steady throughout the session today, gaining after steep losses for the last two sessions as the recent government's industry stimulus measures were instrumental in propping up decent buying interest in market heavy weights.

The benchmark Shanghai Composite Index, which covers both A shares and B shares on the Shanghai Stock Exchange, added 0.78% or 17.27 points to 2,227.13 points after hitting a high of 2,247.62. The Shenzhen Component Index on the smaller Shenzhen Stock Exchange went up 1.61% or 130.40 points to 8,213.90 points.

In Hong Kong, stock market close slightly higher, as a good close on the Chinese stock market encouraged late buying in select Chinese counters, but losses in blue chips held the domestic index backward. The Hang Seng Index ended slightly higher 7.36 points, or 0.06%, to 13,023.36, while the Hang Seng China Enterprise Index, which tracks H shares of Chinese companies, increased by 53.70 points, or 0.74% to 7,266.24.

In Australia, the stock market posted its first gain of the week, led by banking and insurance stocks, but supported by the good gains in the retail and energy sectors. The benchmark S&P/ASX200 added 35.70 points, or 1%, to 3,448.90, while the broader All Ordinaries increased 31.10 points, or 0.90%, to 3,398

On the economic front, Australian Bureau of Statistics report showed that sales of new motor vehicle in Australia fell 1.1% to 76,224 vehicles in January from last month. In trend terms, sales fell 0.8% on the previous month. Sales were down 16.9% over the previous year.

In New Zealand, equities continued to decline for the fourth time in a row. The benchmark NZX50 edged down 0.16% or 4.079 points to close at 2616.926. The NZX 15 fell 0.14% or 6.664 points to 4845.855.

In South Korea, stock market fell for the fourth straight session, as investors confidence remained dented by persistent economic worries that sent exporters lower, while some banks turned negative despite government corporate restructuring plans. The Korea Composite Stock Price Index fell 6.09 points or 0.55% closing the day at 1,107.10 – another lowest finish since 23 January 2009 when market closed at 1,093.40 points.

On the economic front, Korea plans to set up a corporate restructuring fund to buy bad assets from local financial institutions and companies, which are straining under the weight of a global recession and a deepening financial crisis, officials said yesterday. The state-run debt clearer Korea Asset Management Corp. will form the envisioned fund, according to the government's plan aimed at facilitating corporate-sector restructuring.

In Philippines, equities ended marginally higher as the Asian markets clawed back amid lackluster cues from the overnight US markets. The 30-company Philippine Stock Exchange index rose 7.57 points or 0.40% to 1,899.80, while the All-shares index jumped 5.85 points or 0.4761% to 1,234.51.

On the economic front, the near-term outlook for the South east Asian country is decisively grim as the International Monetary Fund stated that the country’s economic growth is set to slow sharply this year as the economy faces “strong head winds” from falling global demand and a drop in remittances from Filipinos working abroad.

In Taiwan, stock markets gained for the second straight session, as investors shrugged off economic woes a rising from the recent drop in gross domestic product supported by the weaker Taiwan dollar. The main Taiex share index ended higher by 30.50 points or 0.68% at 4,528.87.

On the economic front, Taiwan economy hit a recession, as expected, shrinking by almost 3% this year after plunging by a record 8.36% in the December quarter of 2008. The 8.36% contraction for the previous quarter was the biggest fall ever recorded since statistics started in 1952.

Taiwan officially entered its first recession since the 2001 collapse of the technology boom, with the economy contracting during two consecutive quarters, the government said. Gross Domestic Product shrank by 1.05% in the third quarter.

A forecast made last year put economic growth for 2009 at 2.12%, but yesterday, the new prediction was cut to - 2.97%, the Directorate General of Budget, Accounting and Statistics said. In 2001, Taiwan's economy shrank by 2.17%. The 8.36% fall dragged growth for the whole of 2008 down to a barely positive 0.12%, the Directorate General of Budget, Accounting and Statistics announced, expecting signs of a recovery not to appear until the end of 2009.

The governor of the Central Bank of the Republic of China warned that Taiwan could face a deflation crisis in the wake of a government forecast that the consumer price index would move down by 0.82% this year. Directorate General of Budget, Accounting and Statistics chief Shih Su-mei said the current recession was far worse than the 1997 Asian financial crisis and the 2001 dotcom bubble. "Returning to stable growth will take up considerable time," she said.

In an attempt to revive the economy, the central bank said it was cutting key interest rates by 0.25% to a record low level of 1.25%. The latest cut was the seventh since last September. The government has already announced plans for stimulus spending of NT$858.5 billion over four years, equivalent to about 6% of GDP, on infrastructure projects, consumer handouts and tax cuts. It distributed NT$82.9 billion worth of shopping vouchers in January 2009.

In India, key benchmark indices ended slightly higher in what was a lackluster trading session in sync with range-bound activity around global indices. The BSE 30-share Sensex rose 27.45 points, or 0.30%, to 9,042.63. The S&P CNX Nifty rose 13.20 points, or 0.48%, to 2,793.35.

Elsewhere, Malaysia's Kula Lumpur Composite index was up 0.49% or 4.36 points to 899.59, while Indonesia’s Jakarta composite decreased by 6.91 points or 0.52% to 1,323.70. In Thailand, the Thai Stock exchange added 2.02 points or 0.46% to 441.62.

In other regional market, European shares gained on Thursday, on track to close higher for the first time this week, as investors welcomed earnings from Nestle and other major firms. Overall, the French CAC-40 index rose 0.6% to 2,889.94, the German DAX 30 index climbed 0.4% to 4,220.04 while the U.K. FTSE 100 index advanced 0.1% to 4,011.76.