Asian equities fail to impress

Listless sort of day sees most regional benchmarks ending mixed to lower

Asian stocks started the week on a mixed to bearish note with the regional benchmarks giving their initial gains to give indications that the world markets are likely to stay under some strain in the current week. Dollar rallied as safe haven seeking investors returned to the safety of the greenback after China's chief central banker said there will be no sudden changes in its policy on foreign exchange reserves. Apart from China, none of the regional benchmarks manage to record sizeable gains.

China stocks gained 1.61% on strength in property and consumer goods sectors, bucking the weak trend in most of the other markets. The shares in world's fastest growing economy rallied throughout the day, building onto the 0.61% gain they had cloaked by mid day as signs of the country not diversifying out of the US treasuries was taken as a sign that the policymakers in the Asian country expect the export demand from US to gather steam in due course.

The Australian share market fell in a late slide, pulled lower by the energy sector as the oil price fell further. The benchmark S&P/ASX200 index was recently 16.9 points, or 0.4 per cent, lower at 3886.9 points, while the broader All Ordinaries index was down 16.8 points, or 0.4 per cent, at 3882.9.

Japan's Nikkei average also fell 0.9 per cent, erasing morning gains as the drop in oil prices pulled down energy-related shares, with Nippon Oil losing nearly 2 per cent. Some selling pressure was observed at the days highs as traders booked some profits as the market has surged by a massive 32 per cent in the second quarter.

Japan's industrial output jumped a hefty 5.9 percent in May for a third straight month of growth, but traders are likely to shrug off this rise as nothing but manufacturer's attempts to increase inventories after having slashed them too sharply at the end of last year. This is unlikely to stay sustainable and may fail to bring in any desired gains as consumer spending in the western world is unlikely to come back on track soon.

This is more than likely to be the case as last week, the World Bank revised down global growth forecast in 2009 from - 1.7% to - 2.9%. As per the report, US economy is expected to contract deeper by - 3.0%, down from - 2.4%. Euro zone is expected to contract by - 4.5%, down from - 2.7% while Japan is expected to contract by - 6.8%, down from - 5.3%.

Last week, after quite a few ups and downs during the course of the week, the Dow Jones Industrial Average lost 101.34 points (1.2%) for the week to end at 8,438.39. The FOMC left the benchmark rates unchanged (fed funds at range of 0.00% and 0.25%), noting that there is a slowdown in the economic contraction. But the committee also stated that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period of time. The Dow Jones Industrial Average ended lower by 34 points at 8,438.39 on Friday. The Nasdaq Composite Index ended higher by 8.6 points at 1,838.22. S&P 500 ended lower by 1.3 points at 918.9.

In other Asian markets, Philippine share prices closed 0.38 percent lower while New Zealand's NZX-50 was flat, adding 0.16% and Hong Kong's Hang Seng dropped 0.39%. India's BSESENSEX managed to end in green, adding 0.14% though the market breath was very weak. Stocks in Indonesia, South Korea and Singapore ended in red to make it a day tilted more on the downside for Asia.