Asian markets back in red

Nikkei gave up 1.1% while Hang Seng brought 0.6%

Stock market in Asian region closed mixed on Wednesday, 15 April 2009, following a weaker closing on Wall Street, where the major indices declined on disappointing retail sales data and a weak producer prices report.

The markets in Australia, South Korea, Taiwan and Japan ended lower, the markets in China, Hong Kong and Singapore recouped their early losses and ended in positive territory on expectations that China might announce another stimulus to help revive the economy that is already showing signs of recovery.

On Wall Street, financials led the stock market lower as investors brushed off Goldman Sachs upbeat earnings and focused on disappointing economic data. The Dow Jones Industrial Average dropped 137.63 points, or 1.7%, to 7920.18, and the S&P 500 lost 17.23 points, or 2%, to 841.50. The Nasdaq was off by 27.59 points, or 1.7%, at 1625.72.

Meanwhile, President Obama and Federal Reserve Chairman Ben Bernanke spoke separately on Tuesday. The president responded to criticism of government spending and defended the economic relief efforts. "Economists on both the left and the right agree that the last thing a government should do is to cut back on spending in the middle of a recession," Obama said. "The government has to step in to temporarily boost spending in order to stimulate demand."

For his part, Bernanke said that there have been "tentative signs" that the decline in economic activity is slowing; also saying "a leveling out of economic activity is the first step toward recovery."

In the commodity market, crude oil was little changed near $50 a barrel, after falling the past two days, as U.S. crude stockpiles climbed amid signs of further economic weakness in the world's biggest energy consumer.

Crude oil for May delivery was at $50.24 a barrel, up 83 cents, in electronic trading on the New York Mercantile Exchange at 10:54 a.m. London time. It earlier fell as much as 49 cents, or 1%, to $48.92 a barrel.

Brent crude oil for May settlement was at $52.41 a barrel, up 45 cents, on London's ICE Futures Europe exchange at 11:14 a.m. London time. It declined 18 cents, or 0.3%, to end the session at $51.96 a barrel yesterday.

Gold gained as a rally in global stocks halted and on investor expectations for inflationary pressures to rebound on government stimulus spending, boosting demand for the precious metal as a store of value. Gold for immediate delivery declined 0.04% to $891.60 an ounce at 10:54 a.m. London time.

In the currency market, fluctuation in yen crosses dominated the Asian session today as the yen extends recent rebound against other major currencies. Japanese Nikkei followed Wall Street losses by dropping nearly -100 points to 8742. The Japanese currency gained ground across the board against its major currencies on Wednesday. The Japanese currency edged up to 98.94 against the US dollar, compared to Tuesday's New York session closing values of 99.

The Hong Kong dollar was trading at HK$ 7.7502 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 closed lower on Wednesday as world markets suffered a renewed bout of risk aversion. Towards its closing, the Australian dollar was trading at 71.75/78 US cents, down from Tuesday's close of 72.44/47 US cents. During the session, the unit traded between 72.37 and 71.46 US cents.

In Wellington trades, the NZ dollar ended the day at US57.80c, down from US59.10c yesterday. The New Zealand dollar was weaker today after worse-than-expected US retail sales data highlighted concerns about a global economic recovery.

The South Koran ended at 1,338 won to the dollar, down 14.5 won from Tuesday's close, as overseas investors cut holdings of local shares.

The Taiwan dollar weakened against the US dollar as it was trading at NT$ 33.790, down by NT$ 0.170 from Tuesday's close of NT$33.620.

Coming back in equities, Asian markets ended mixed amid concerns that stocks had risen too much too fast, with technology shares retreating on weak forecasts.

In Japan, the stock market finished the session lower, extending losing streak for second consecutive day, as financial sector gave back some of the recent gains and technology stocks dived as a lack of clarity in Intel Corporation's earnings outlook. Exporters dived as unexpected drop in U.S. retail sales and a stronger yen dimmed the profit outlook.

After opening in a negative note, following Wall Street's overnight losses after a disappointing retail sales report for March and a weaker-than-expected producer price index report punctured investors' optimism about the economy, and on concerns over a possible bankruptcy of US carmaker General Motors, and its effects on Japanese carmakers and auto-parts makers.

The Nikkei 225 Stock Average index dived 99.72 points, or 1.1%, to 8,742.96, while the broader Topix was 8.17 points, or 1%, lower to 835.

On the economic front, the Ministry of Economy, Trade and Industry said in a revised statement that Japanese industrial production declined for the fifth consecutive month in February to 9.4%. Output recorded an annual fall of 38.4%. On a seasonally adjusted basis, production fell 11.9% in February compared to a 12.9% decline in January.

In Mainland China, the stock index recouped morning losses to finish the session 0.3% higher, after swung between gains and losses, led by technology shares on speculation the government will aid the high-technology industry. Automakers were firmer on speculation the government will announce new measures that will aid car purchases. Metal stock was firmer on rise in copper prices.

Market consumers appear more optimistic as Beijing's massive government spending and easier fiscal policies will lead consumers and businesses to sink more money into the economy and help China stage a quicker recovery.

The benchmark Shanghai Composite Index, which covers both A shares and B shares on the Shanghai Stock Exchange, rose 0.3%, or 8.87 points to 2,536.05. The Shenzhen Component Index was up 0.48%, or 46.40 points to close at 9724.58.

On the economic front, the Commerce Ministry said Wednesday China's foreign direct investment in March totaled $8.4 billion, down 9.5% from the same month last year.

In Hong Kong also the stock market recouped morning losses to finish the session higher, endured winning streak for third consecutive day, driven by strong rebound in the shares of commerce & industry issues on optimism as Beijing's massive government spending and easier fiscal policies will lead consumers and businesses to sink more money into the economy and help China stage a quicker recovery.

The Hang Seng Index rebounded 89.46 points, or 0.57%, to 15,669.62, while the Hang Seng China Enterprise Index, which tracks H shares of Chinese companies, rose 90.55 points, or 0.98% to 9,305.46.

In Australia, the stock market finished the session marginal lower, after swung between gains and losses, dragged down by losses in financials and property trusts, offset gains in materials and miners stocks. The benchmark S&P/ASX200 dropped 5.40 points, or 0.14%, to 3,747.5, while the broader All Ordinaries dived 4 points, or 0.11%, to 3,693.90.

On the economic front, a private sector leading index of Australia's economic activity published by Westpac Bank and the Melbourne Institute showed a contraction in February of 0.3% compared January and declined at a full-year rate of 5.1% in February. The coincident index, which measures current economic activity, was down 0.5% in February compared to January.

In New Zealand, equity market remained almost flat after stocks on the Wall Street ended lower overnight. Stocks on the benchmark index fell ended in the positive for the third time in a row. The share market began strong yesterday after the Easter break, however lost momentum early thus morning. The benchmark NZX50 closed in the green territory, up 0.02% or 0.471 points to close at 2600.288. The NZX 15 ended down 0.06% or 2.690 points to close at 4813.526.

In South Korea, stock markets fell as investor hopes for an economic recovery were dented by weak U.S. retail sales. The benchmark Korea Composite Stock Price Index (KOSPI) shed 9.54 points to close at 1,333.09, ending a four-session gaining streak.

On the economic front, South Korea's jobless rate inched up in March but job loss accelerated sharply as companies trimmed recruitment for fear of a worsening economic downturn. The unemployment rate stood at 4 percent last month, up from the previous month's 3.9 percent, according to the report by the National Statistical Office. Job losses accelerated; with employers eliminating 195,000 positions from their payrolls compared with a year earlier, the highest since March 1999 when the nation was in the midst of the Asian financial crisis.

In Taiwan, stock market receded from its near seven month high, as investors booked profit from recent rally by selling financials such as Cathay Financial that had risen on a potential agreement with China. Financial shares were hit after their U.S. peers slid on Tuesday on fears that more banks would follow Goldman Sachs' share offer to raise cash.

The main Taiex share index snapped its upward rally, receding from a new six and half months high stature, but sustaining the level of 5800 – points for a third straight session. Taiex cast off 17.49 points or 0.3%, closing the day at 5875.19.

On the economic front, the number of applicants for unemployment benefits continues to decrease in April as the economy shows signs of improvement, the Bureau of Labor Insurance said today.

During the first 14 days of April, an average of 866 people per working day applied for the benefits for the first time since becoming unemployed, down significantly from the average of 1,275 in the same period the previous month.

Meanwhile, the total number of applications has also been falling after reaching a peak of 6,000 per working day on average in February. The number dropped to 5,000 per working day in March and further to 4,200 per working day so far in April.

On the other hand, Standard & Poor's Ratings downgraded the outlook on Taiwan's sovereign rating to negative from steady, citing excessive debt burden of the Taiwanese government and poor performance of the local financial industry.

Standard & Poor's retained Taiwan's sovereign rating at AA-. It, though, noted that due to expanded fiscal outlays for economic stimulus measures and the issuance of spending vouchers, the total debt of the Taiwanese government would climb to 142% of its annual revenue by the end this year, the highest among economies under the AA- category. In addition, under the worst scenario, debts of the financial industry may top 48% of the gross domestic output (GDP), much higher than the average level of 28.4%.

In Philippines, the stock market, continued to take a downhill for the third consecutive day, as investors continued to book in profits as investor's became anxious by the overnight losses on Wall Street. At the concluding bell, the benchmark index dived 0.71% or 14.60 points to 2,022.49, while the All Share index fell 0.22% or 2.95 points to 1,320.57.

Socioeconomic Planning Secretary Ralph G. Recto yesterday said A P250-billion budget shortfall, at least 40% more than programmed, could be posted this year on the back of thinning revenues. Mr. Recto said a simulation by the National Economic and Development Authority (NEDA) showed the government would likely not meet its P177.2-billion deficit target as shrinking imports take their toll on Customs revenues. The agency also assumed a "worst case scenario" where the government fails to generate income from asset sales.

Imports plunged 34.5% in January from a year earlier as the electronic sector trimmed headcounts and output on slowing economic activity. Mr. Recto said on Monday that imports could fall by 12-14% this year, deeper than a previous estimate of an 8-10% decline. The wider deficit means the government will need to further shore up its funding requirement for this year, the NEDA chief said. The government has set its domestic borrowing program at P442 billion, while its foreign funding plan consists of $1.1 billion from foreign donors and $1.5 billion in commercial debts.

In India, bulls tightened their grip as stocks witnessed a spectacular rally for the eight consecutive trading session. Small-cap and mid-cap stocks spurted. Buying was broad based with 11 out of 12 sectoral indices on the BSE in positive terrain.

The BSE 30-share Sensex was up 317.51 points or 2.9% to 11,284.73. At the day's high of 11,337.75, the Sensex rose 370.53 points in late trade, its highest level since 14 October 2008. The S&P CNX Nifty was up 101.55 points or 3% at 3484.15.

In Singapore, the stock market reversing declines in the final minutes of trading to finish the session higher, on tracking positive cues from china market. The market witnessed the broad based gains, led by manufacturing and multi industries. Meanwhile buying pressure was evident in financials and properties issues. The blue chip Straits Times Index rose 8.97 points, or 0.47%, to 1,905.99.

On the economic front, Singapore's Minister of State for Manpower and Trade and Industry Lee Yi Shyan said that government-backed loans rose to a total value of more than 760 million Singapore dollars (about 507 million U.S. dollars) in March with small and medium-sized enterprises (SMEs) being the main beneficiaries.

The Department of Statistics said retail sales in Singapore declined 15.5% month-on-month in February, following a 8.3% fall in January. On a seasonally adjusted basis, retail sales grew 10.5% in February from the previous month, after falling 9.9% in the previous month. Excluding motor vehicles, retail sales dropped 3%. Year-on-year, retail sales slipped 5.7% in February, and excluding motor vehicles sales, it was down 10.2%.

In the Monetary Policy Statement released yesterday, the MAS stated that it will re-center the exchange rate policy band to the prevailing level of S$NEER. The central bank further noted that the current level of the S$NEER is appropriate for maintaining domestic price stability over the medium term, considering the prospects for growth in the economy.

The Ministry of Transport in Singapore said Singapore and Malaysia agreed to expand the bilateral air services agreement between both countries. Carriers from both countries can now fly to six new destinations in Malaysia and expand services in existing routes to Kuala Lumpur, Penang, Langkawi and Kota Kinabalu.

Elsewhere, Malaysia's Kula Lumpur Composite index was up 0.3% or 2.97 points to 956.68 while Indonesia's Jakarta composite index jumped by 1.5% or 23.40 points ending the day at 1593.66.

In other regional market, European shares traded modestly lower on Wednesday, dragged down by losses in the financial sector after UBS said that it will post another quarterly loss. On a regional level, the German DAX 30 index fell 0.5% at 4,532.89 and the French CAC-40 index declined 0.6% at 2,983.61. The U.K. FTSE 100 index traded flat at 3,987.19.