Asian markets kick off week steadily

Singapore, Shanghai, Sensex post-good gains as most of the region closed for Easter holiday

Stock market in Asian region closed in positive territory on Monday, 13 April 2009, as expectations about the recovery in global economy increased. Positive closing on Wall Street on Thursday, led by Wells Fargo, and comments over the weekend by President Barack Obama that glimmers of hope are visible on the horizon of U.S economy, coupled with the announcement of a stimulus package by Japan to revive the economy, influenced sentiment across the markets.

On Wall Street, stock markets ended the week on Thursday with huge gains as better-than-expected earnings pre announcement from Wells Fargo sent the financial sector considerably higher. It was coupled with encouraging same store sales data from Wal-Mart induced buying in the broader market thereby helping the Dow move up beyond 8,000 once again. After opening 160 points up earlier during the day, The Dow Jones Industrial Average ended higher by 246 points at 8,083. The Nasdaq Composite Index, ended higher by 62 points at 1,652. S&P 500 ended higher by 31 points at 856.

In the commodity market, crude oil fell in New York after the International Energy Agency said 2009 demand might slump to the lowest in five years as factories shut and car sales tumble amid a deepening global recession. Crude oil consumption will fall 2.4 million barrels a day this year, about the same amount that Iraq produces, to 83.4 million barrels a day, the IEA said on 10 April 2009 as trading in New York and London was closed for the Good Friday holiday. U.S. crude supplies are at their highest since July 1993, the Energy Department said on 8 April 2009.

Crude oil fell as much as $1.54, or 2.9%, to $50.70 a barrel at 11:24 a.m. in London. Brent crude oil for May settlement fell $1.06, or 1.96%, to $53 a barrel on London’s ICE Futures Europe exchange at 11:44 a.m. London time.

Gold climbed for a second day. The yellow metal for immediate delivery added 0.9% to $888.90 an ounce at 11:24 a.m. London time after dropping 1.3% last week in the third weekly decline

In the currency market, the US dollar edged up on the yen in quiet trade on Monday, with many Asian and European financial centers closed for the Easter Monday holiday and as markets waited for the U.S. corporate earnings season to get into full swing.

The Japanese yen gained ground against its major despite a report showed that the Japanese wholesale prices fell 2.2% in March. The Japanese currency jumped to a 100.45 versus the US dollar.

The South Korean won ended at 1,329 won to the dollar, up 4 won from Friday's close, as demand from offshore investors rose to buy local stocks.

The Taiwan dollar strengthened against the US dollar as it closed trading at NT$ 33.697, up by NT$ 0.098 from Friday’s close of NT$33.795.

Coming back in equities, stock market in Australia, New Zealand, Thailand and Hong Kong were closed on the account of Easter Monday.

In Japan, stock market finished the session mixed, after swinging between gains and losses, as investors booked profit after the Tankan survey data showed in March Japan’s wholesale prices fell at the fastest pace in almost seven years, adding to signs the world’s second-largest economy may return to deflation. The Nikkei 225 Stock Average index dived 39.68 points, or 0.4%, to 8,924.43, while the broader Topix was 3 points, or 0.3%, higher to 849.

On the economic front, the Bank of Japan said producer prices, the costs companies pay for energy and raw materials, sank 2.2% in March from a year earlier, the biggest slide since May 2002. Japan’s producer price index fell 0.2% month-over-month in March.

Taro Aso, Japan’s prime minister, on Friday launched a 15.4 billion yen ($154bn, €117bn, £105bn) fiscal stimulus designed to sustain an economy in its worst slump since the Second World War.

The figure amounts to 3.1% of Japan’s gross domestic product and will be the largest ever for a single year, surpassing former Prime Minister Keizo Obuchi’s JPY 8.5 trillion stimulus during the Asian financial crisis in 1998. Japan’s Prime Minister Taro Aso has unveiled three packages third since taking office in September and bringing total spending to 25 trillion yen.

The proposal includes a 1.6 trillion yen investment in low-carbon technology, 1.9 trillion yen on employment measures and 370 billion yen for subsidies of new car purchases.

In Mainland China, the stock index finished the session sharply higher, touching eight months high, with strong gains across the board, as market consumers appear more optimistic as China lending data over the weekend showed stimulus efforts may be bearing fruit and the recent stock rebound driven by world stock market gains and expectations on recovering macro economy in the first quarter.

The benchmark Shanghai Composite Index, which covers both A shares and B shares on the Shanghai Stock Exchange, rose 2.8%, or 69.47 points to 2,513.70. The Shenzhen Component Index was up 2.08%, or 194.36 points to close at 9539.80.

On the economic front, the People’s Bank of China (PBOC) said banks extended 1.89 trillion Yuan ($276.6 billion) in local currency denominated loans in March, bringing the total for the first quarter to 4.58 trillion Yuan, nearing the government’s full-year target of at least 5 trillion Yuan.

China’s annual industrial output growth accelerated to 8.3% in March, picking up from a record low of 3.8% in the first two months of the year, Premier Wen Jiabao said on Saturday.

The National Bureau of Statistics said in a statement that Real-estate prices in 70 major cities fell 1.3% in March from a year earlier and new construction by floor area fell 16.2% in the first quarter.

The total value of China’s exports and imports in March dropped 20.9% as compared with the 24.9% drop recorded in February, according to the statistics released by China’s General Administration of Customs on Friday. China’s exports in March were $90.29 billion, only 17.1% less than March exports a year earlier, whereas imports in March dived 25.1% year on year to $71.73 billion.

In March, the country recorded a trade surplus of US$18.56 billion, up 41.2% from a year earlier, and up as much as 287% over the previous month.

In South Korea, stocks closed higher after swerving in and out of negative terrain, as investors were cautiously optimistic over the first-quarter earnings outlook. After trading in a narrow range, the benchmark Korea Composite Stock Price Index (KOSPI) advanced 2.22 points, or 0.17 percent, to close at 1,338.26.

In Taiwan, stock market continued its climb for third straight session on Monday, 13 April 2009, following the regional trend, touching year-to-date high, as China readied to sign economic cooperation agreement with Taiwan which will benefit both the Chinese and Taiwanese economies, facilitating their joint effort in linking up with the Asia-Pacific regional economic cooperation mechanism.

The main Taiex share index bang on its upward rally, taking the benchmark index above the level of 5800 – points giving a new six and half months high stature. Taiex sprang 75.68 points or 1.31%, closing the day at 5857.64, the highest closing since 26 September 2008 when market closed the day at 5929.63.

On the economic front, according to the Taiwan Association of Machinery Industry (TAMI) Taiwan exported US$16.633 billion of machinery in 2008, for a moderate 2.8% growth year-on-year from US$16.175 billion. Despite the slight growth, the industry saw continued decline in exports in the last two months of 2008 due to the global recession. The Taiwan Association of Machinery Industry’s tallies show that Taiwan’s exports of machinery amounted to US$1.259 billion and US$1.095 billion in November and December last year, down 7.7% and an amazing 30.8% respectively.

In other economic news, to cope with rising unemployment, the Cabinet-level Council of Labor Affairs (CLA) has decided to cut the quota for foreign laborers to keep jobs for locals.

Council of Labor Affairs therefore announced at the beginning of this year that 30,000 foreign workers would be cut, and within only two months some 15,800 such laborers have been chopped, more than half of the target.

Meanwhile, the cabinet-level Financial Supervisory Commission (FSC) in Taiwan is considering setting up a financial stabilization fund, similar to the deposit insurance system used by the banking sector, said FSC chairman Sean Chen. The FSC plans to use the insurance sector’s business taxes to set up a special reserve fund to protect the insured. At present, Taiwan’s insurance industry, including life and non-life sectors, has NT$16.6 billion (US$491.12 million) in insurance stabilization funds. The insurance stabilization funds, including the annual taxes of between NT$7 billion (US$207.1 million) and NT$8 billion (US$236.68 million) levied on the insurers, will be more or less helpful to offset the debts of financially troubled insurers.

In Philippines, the equity market closed lower, weighed down by the razor sharp losses registered in the industrial index, which tumbled more than 4%. Moreover, heavy selling in heavyweight index also dragged the composite index lower. The benchmark index PSEi slipped 1.42% or 29.61 points to 2,043.20, while the All Shares index fell 0.54% or 7.30 points to 1,321.72.

In India, high volatility characterised trading in the last one hour. The market came off the higher level after a surge, which took the Sensex past the psychological 11000 mark in late trade. Metal, banking and realty shares surged. Shares of software outsourcers, however, lagged as rupee gained against the dollar.

The BSE 30-share Sensex rose 163.36 points or 1.51% to 10,967.22. At the day's high of 11,069.54, the Sensex rose 265.68 points in the mid-afternoon trade, its highest level since 15 October 2008. The S&P CNX Nifty was up 24.90 points or 0.75% at 3366.95. The stock market remains closed tomorrow, 14 April 2009, on account of Dr. Ambedkar Jayanti.

Elsewhere, Malaysia's Kula Lumpur Composite index was up 1.1% or 10.02 points to 917.89 while Indonesia’s Jakarta composite index jumped by 5.1% or 74.65 points ending the day at 1540.40.

Coming to the other regional markets, the European regional indices were also closed on the account of Easter Monday holiday.