Asian benchmarks struggle for direction

Most of the indices end mixed in a choppy session

Asian markets ended mixed as the regional benchmarks struggled for direction following a neutral session in the US equities overnight. However, select markets recorded decent gains as the economic outlook continued to be optimistic. Commodities were steady to positive and the upside in Japan, Malaysia and Taiwan markets continued to send across a message that the global asset markets might be well off their decade lows in the near term.

The Nikkei rose today after data showed Japanese first quarter GDP dropped a price-adjusted 4.0% on quarter, or an annualized 15.2%. It was the fourth straight quarter of shrinkage, but not as bad as the 16% decline some forecasters had predicted. Japan's Nikkei 225 was up 0.4%.

Strong gains were noted in the Malaysian equities. The Department of Statistics Malaysia said in a report today that the consumer price index or CPI rose 3% year-over-year in April, slower than the 3.5% increase in the previous month. On a monthly basis, consumer prices declined 0.2% in April, marking the same pace as in the preceding month. The KLSE composite closed up nearly 2% on the day.

Chinese equities slipped around 1% as recent gains proved difficult to be sustained. David Dollar, World Bank's country Director for China reportedly said that stimulus spending of Chinese government helped the economy to stabilize.

Dollar added that enthusiasm about an economic recovery in China is premature. He said the revival of private investment is very important for the recovery. Chinese economic growth had eased to 6.1% in the first quarter from 6.8% in the last quarter of 2008. Meanwhile, urban fixed asset investment had surged 30.5% during January to April period.

Taiwan logged a current account surplus of US$12.99 billion in the first quarter, higher than a surplus of US$8.47 billion in the same period last, a report from the Central Bank showed Wednesday. Economists expected the surplus to be US$10.5 billion.

During the quarter, the surplus in the goods account increased to US$9.04 billion from US$4.27 billion, while the services account recorded a surplus of US$0.6 billion, in contrast to a deficit of US$0.01 billion last year. Further, the current transfers account showed a smaller deficit of US$0.54 billion compared to US$0.9 billion deficit last year. On the other hand, the income account surplus decreased to US$3.9 billion from US$5.1 billion in the previous year. In other markets, Australia's S&P/ASX 200 down 0.6% and South Korea's Kospi Composite up 0.1%, Hong Kong's Hang Seng Index was 0.3% lower. Singapore's Straits Times Index was down 0.4% with Malaysian shares up 1.7%, New Zealand's NZX-50 up 0.1%, Philippine shares 0.9% higher and Indonesian shares down 2.1%.

Yesterday, the US markets posted a relatively neutral session on Tuesday, as commodity and technology stocks continued to climb amid further signs of improvement in financial and economic conditions. The VIX (US volatility indicator) fell below the 30 level for the first time since the collapse of Lehman Brothers.

Crude oil extended the recent bull charge as light, sweet crude for July contract moved to a fresh six month high of $60.75 per barrel. The counter currently trades at $60.63, up 53 cents from the previous close. Gold and copper also garnered modest gains as the US dollar fell above 1.3700 and threatened to re test a seven week low yet again.