Sensex pull Asian Market Out of Gloom

Shanghai, Hang Seng, Taiex follows Sensex Rally while Sydney, Seoul linger in red

Stock market in Asian region staged a turnaround ending the day mixed on Monday, 18 May 2009, after opening mostly lower by taking cues from Wall Street, where the major indices ended lower on Friday on concerns about the economic outlook.

Towards the end of the day, the markets in Australia, New Zealand, South Korea, and Japan ended lower, the markets in China, Hong Kong, Singapore, Indonesia and Taiwan ended in positive territory.

The trigger for the turnaround was found in the markets of India that soared more than 17%, forcing regulators to stop trading for the day as markets cheered the return to power of the ruling Congress party with a clear mandate

Meanwhile, on Wall Street, stocks oscillated between red and green for the entire day but ultimately ended the day with modest losses. The Dow Jones Industrial Average ended lower by 62.68 points at 8,268.64. The Nasdaq Composite Index, ended lower by 9 points at 1,680. S&P 500 ended lower by 10 points at 882. For the week, indices registered good losses at Wall Street. In percentage terms, Dow lost 3.6%, Nasdaq lost 3.4% and S&P 500 lost 5% during the week.

In the commodity market, crude oil rose on speculation that prices fell too far at the end of last week and may rebound as optimism about an economic recovery grows.

Crude oil for June delivery rose as much as 76 cents, or 1.4%, to $57.10 a barrel in electronic trading on the New York Mercantile Exchange. The contract traded at $57 at 10:16 a.m. London time. The June Nymex oil contract expires tomorrow. The more actively traded July contract was at $57.63 a barrel, up 63 cents, at 10:16 a.m. London time.

Prices rose today after dropping 3.9% on 15 May 2009, the biggest decline in almost a month, when a report showed U.S. industrial production fell for a sixth month. Crude also climbed after Nigerian militants attacked pipelines from Chevron Corporation’s Escravos terminal to domestic refineries and power stations.

Brent crude for July settlement rose as much as 82 cents, or 1.5 percent, to $56.80 a barrel on London’s ICE Futures Europe exchange. The contract was at $56.71 a barrel at 10:17 a.m. London time.

Gold traded little changed near a seven-week high in Asia as some investors may have sold the metal to meet margin calls after a drop in global stocks. Immediate-delivery gold was up 75 cents at $932.55 an ounce at 2:02 p.m. in Singapore. The metal rose to $934.20 May 15, the highest since March 27. Gold for June delivery in New York was little changed at $932.60.

In the currency market, the Japanese yen extends recent rally as the week starts on the back of weakness in stocks. Nikkei breached 9000 psychological level briefly but managed to close 226pts down at 9038. Moody's unified Japan's debt ratings to Aa2, with foreign-currency debt ratings lowered from Aaa and local currency assessment raised from Aa3. Moody's said that the rating reflects the risks of Japan's "high level of debt" and the country's fiscal position is "vulnerable to shocks or imbalances".

The Japanese yen strengthen against its most major counterparts on Monday on concern the recession in the world’s biggest economy will be prolonged as General Motors Corp nears bankruptcy and European Central Bank will cut interest rates further to spur a recovery in the European economy. The Japanese currency quoted at 94.63 per greenback.

The Hong Kong dollar was trading at HK$ 7.7516 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 weakened against its major counterparts after poor economic data from the Euro zone dampened optimism the world economy may be stabilizing, pushing investors back into safe-haven currencies. The Aussie was quoted at 74.80 cents against the greenback on Monday.

In Wellington trades, the New Zealand dollar fell to its lowest level in a week and a half against the greenback as persistent worries about world economic prospects led to rises in the United States and Japanese currencies. The NZ dollar ended the day at US58.60c from US59.30c on Friday.

The South Koran won ended at 1,259.5 won against the dollar, down 2.5 won from Friday's close, as stock market setbacks turned investors away from risky assets.

The Taiwan dollar weakened against the US dollar as it was trading lower at NT$ 32.9870, down by NT$ 0.0.370 from Friday’s close of NT$32.950.

Coming back in equities, a surge in Indian equities following a decisive election victory by the Congress Party-led coalition over the weekend-helped turn around other markets in Asia today.

In India, a clear mandate for the Congress-led United Progressive Alliance (UPA) in Lok Sabha elections send stocks surging with trading on the bourses halted for the day at about 11:55 IST. For the first time in the history of the stock markets trading was halted because the market-wide circuit were applied due to a solid surge. Earlier, there have been instances when trading was halted when market-wide circuit filters were applied due to a market crash.

The 30-share Sensex jumped 2110.79 points or 17.34% at 14,284.21 and the 50-unit S&P CNX Nifty gained 651.50 points or 17.74% to 4,323.15.

Trading was halted in just 16 seconds after the market re-opened at 11:55 IST. Earlier in the day, trading was halted within seconds of opening as the market soared following a clear mandate in the Lok Sabha election. A clear mandate for the Congress-led United Progressive Alliance (UPA) boosted hopes a strong coalition would be able to push through economic reforms that would boost foreign investment. The 30-share Sensex surged 14.70% or 1,789.88 points to 13,963.30 and the 50-unit S&P CNX Nifty gained 531.65 points or 14.48% to 4203.30.

The BSE Sensex attained its highest closing since 11 September 2008 and the S&P CNX Nifty attained its highest closing since 10 September 2008.

In rest of Asia, Japanese stock market finished the session sharply lower, on broad based slumps across the sector. Exporters and automakers dragged down the market as of strengthening yen against greenback and after Panasonic tepid earnings report. The spread of the new flu in Japan dampened investor sentiment further. The Nikkei 225 Stock Average index tumbled 226.33 points, or 2.4%, to 9,038.69, while the broader Topix index dropped 21.94 points, or 2.5% to 860.

In Mainland China, Shanghai stock market recouped early losses to finish the session slightly higher, as investors chased bargains in energy and non ferrous stocks amid speculation prices of the fuel and commodities will rise on higher demand, while Banks ended mixed after banking regulator said lenders face pressure on profits.

The Shanghai Composite Index, which covers both A shares and B shares on the Shanghai Stock Exchange, rose 0.3%, or 7.51 points, to close at 2,652.77, while the Shenzhen Component Index on the smaller Shenzhen Stock Exchange recovered 0.4% or 40.82 points to close at 10,314.04 points.

In Hong Kong, the stock reversed early losses in afternoon trading to finish the session higher, as rebound in energy, finance, and properties stocks on tracking sharp recovery in shanghai bourses in a bout of late-session buying. The Hang Seng Index gained 232.21 points, or 1.38%, to 17,022.91, while the Hang Seng China Enterprise Index, which tracks H shares of Chinese companies, rose 184.95 points, or 1.93% to 9,792.24.

In Australia, the stock market finished the session lower, with broad based losses across the sector on the back of weak lead from Wall Street, collapse of Australia’s largest managed investment scheme Great Southern, a number of capital raisings, and weakness in commodity prices. At the closing bell, the benchmark S&P/ASX200 index has retreated 37.6 points, or 1%, to 3,735.60, while the broader All Ordinaries erased 37.3 points, or 0.99%, to 3,721.60.

In New Zealand, equities dipped down to commence the first trading day of the week in the negative terrain. The share market was in line with most of the Asian markets that fell early today, trailing pessimism on the Wall Street that closed in the red on Friday. The NZX50 dipped down 0.36% or 13.04 points to 2777.86. However, NZX 15 fell 0.81% or 41.71 points to close at 5078.32.

On the economic front, New Zealand’s producers' input prices, as measured in the producer price index (PPI), fell 2.5% and output prices fell 1.4%in the March 2009 quarter, Statistics New Zealand said today. Lower prices for imported crude oil and for fuel made major contributions to the fall in input prices, while lower prices in the dairy product manufacturing index drove down output prices. The 2.5% fall in the inputs index is the largest since the series began in the December 1977 quarter.

The capital goods price index (CGPI) in New Zealand rose 1.2%in the March 2009 quarter, Statistics New Zealand said today. The most significant upward contribution came from the plant, machinery and equipment index. This rise was mainly due to the depreciation of the New Zealand dollar. On an annual basis, the CGPI rose 4.9% in the year to the March 2009 quarter. This rise is the largest annual movement since the series began in the December 1989 quarter, following rises of 2.5%and 3.6%in the years to the March 2008 and the March 2007 quarters, respectively.

In South Korea, shares closed lower Monday as investors unloaded steel, shipyard and financial shares amid lingering concerns over an economic slowdown. The benchmark Korea Composite Stock Price Index (KOSPI) lost 5.05 points or 0.36% to 1,386.68, after falling to as low as 1,366.58 in early trading.

On the economic front, South Korea posted a fresh record-high trade surplus in April as imports declined faster than exports amid a protracted economic slowdown, a report showed Monday. According to the report by the Korea Customs Service, South Korea's trade surplus amounted to US$5.79 billion last month, up from the previous month's $4.28 billion. The April figure is the highest, renewing the all-time record set in March. Exports fell 19.6 percent last month from a year earlier to $30.42 billion, while imports plunged 35.6 percent over the same period to $24.63 billion, the report showed.

In Singapore, the stocks index clawed back early losses in last hour of trading to finish the session higher, as investors chased bargain hunting, buoyed up on tracking gains in Asian bourses. Finance and properties surged on tracking sharp recovery in shanghai bourses in a bout of late-session buying; meanwhile bargain hunting was evident in manufacturers and multi-industries on hopes for recovery in demand. The blue chip Straits Times Index leaped 37.20 points, or 1.74%, to 2,176.98.

On the economic front, Singapore April non-oil domestic exports down 19% on year vs. 17% fall in March, meanwhile NODX fell seasonally adjusted 1.3% month-on-month in April, reversing a 10% rise in March, according to Trade and Industry Ministry figures released Monday.

In Taiwan, stock market continued its upward run by closed the day higher, as Chinese measures to forge closer trade ties with Taiwan spurred buying in transport, tourism and property shares.

In line with the pledge of its leaders to help Taiwan alleviate its plight amid the global economic downturn, Mainland Chinese authorities offered a package of eight favorable economic measures for Taiwan, including the signing of a framework agreement for cross-Strait economic cooperation.

At the Fujian Cross-Strait Forum, Wang Yi, director of Taiwan Affairs Office, under the The Chinese government will also encourage more Chinese tourists to visit Taiwan, with the aim of boosting their number to over 600,000 this year. Moreover, the Chinese government will encourage and assist qualified Taiwanese enterprises to tap the Chinese market and take part in major infrastructure facilities and construction projects, conceived mainly for boosting domestic demand.

The main Taiex share index gained further as Taiex added 63.63 points or 0.97%, closing the day at 6577.81, highest closing since 11 May 2009 when market closed the day at 6647.50.

In Philippines, the stock market opened the week on a negative note, as investors engaged in profit taking activities. Moreover, hefty losses in the key heavyweight stocks also dragged the composite index lower. At the final bell, the benchmark index PSEi slipped 1.27% or 29.33 points to 2,279.37, while the All Shares index fell 0.78% or 11.56 points to 1,465.84.

On the economic front, the country’s external payments position improved in April to an almost complete reversal from the deficit posted the month before, the central bank reported today. Bangko Sentral ng Pilipinas (BSP) data released today showed the country’s balance of payments (BoP) swinging to a $466-million surplus in April, or an almost complete reversal from the $472-million deficit in March. This brought the year-to-date BoP to a surplus of $2.2 billion as of the end of last month, the BSP said.

Elsewhere, Malaysia's Kula Lumpur Composite index was down 0.22% or 2.20 points to 1012.01 while Indonesia’s Jakarta composite index jumped 3.01% or 52.65 points ending the day at 1803.57.

In other regional market, European shares shook off early weakness to trade higher Monday, as gains for banks such as HSBC Holdings and UniCredit offset weakness in most metal stocks. The U.K.'s FTSE 100 index rose 1.1% to 4,394.66 in Monday's action, while the German DAX 30 index climbed 0.3% to 4,751.60 and the French CAC-40 index rose 0.2% to 3,174.44.

In the UK, Rightmove House Price raised +2.4% mom, the 4th consecutive monthly increase, in May after gaining +1.8% a month ago. It's also the largest rise since the survey began in 2003. On annual basis, the reading fell -6.2%, compared with -7.3% in the previous month. The moderation in decline indicated the market turned more optimistic about the housing market.

Looking ahead, in the US, NAHB housing market index set to increase further in May after adding 5 points to 14 in April. Recent rise in the index suggested that new home sales might improve soon. US' Treasury Secretary Timothy Geithner will speak at 1530 GMT.