Asian markets end mixed

Shanghai, Sensex closed lower while Nikkei, NZX 50 turned higher

Stock market in Asian region closed mixed on Tuesday, 30 June 2009; on optimism a recovery in the global economy will lift earnings for producers of commodities and electronics. Risk appetite was on the rise again, after the DJIA rose 1.1% and front-month Nymex crude futures settled at their highest point in more than two weeks.

On Wall Street, stocks ended day on a strong note. Markets started the day in the green during the day but slipped in the red soon for a very brief period of time. But stocks recovered fast and indices traded in the green since then within a limited boundary. There was a lack of clear leadership, which checked stocks from moving higher.

The Dow Jones Industrial Average ended higher by 90.5 points at 8,528. The Nasdaq Composite Index, ended higher by 5.8 points at 1,844.22. S&P 500 ended higher by 8.2 points at 927.

In the commodity market, crude oil rose to the highest in eight months, set for its biggest quarterly gain since 1990, as the U.S. dollar declined and militant attacks in Nigeria curbed supply from Africa’s largest producer.

According to reports, Nigerian militants said they attacked an oil platform run by Royal Dutch Shell. This marks the latest in a series of claimed incursions on crude networks in the Niger Delta.

In other oil news, this morning the International Energy Agency rewrote its earlier demand projections, saying instead that global demand for crude oil may be lower than previously thought in the coming years because of the economic slowdown.

The International Energy Agency’s Medium-Term Oil Market Report yesterday cut oil- consumption estimates for every year through 2013 by about 3 million barrels a day. Consumption will average 86.76 million barrels a day in 2012, the first year demand will rise above 2008’s level of 85.76 million, the IEA said.

Crude oil for August delivery gained as much as $1.89 to $73.38 a barrel on the New York Mercantile Exchange, the highest since Oct. 21. It was at $72.23 a barrel at 9:41 a.m. in London.

Brent crude oil for August settlement rose as much as $2.51, or 3.5%, to $73.50 a barrel on London’s ICE Futures Europe exchange and traded at $71.77 at 9:42 a.m. local time. Yesterday, it gained $2.07, or 3%, to $70.99 a barrel, the biggest gain since 4 June 2009.

Gold climbed above $940 an ounce in Asia, heading for a third quarterly increase, as the weakening dollar fueled demand for the precious metal as a store of value. Gold for immediate delivery gained 0.4% to $941.42 an ounce at 9:40 a.m. in Singapore, gaining for a third quarter.

In the currency market, the Japanese yen softened against major currencies on Tuesday. The Japanese currencies were quoted at 96.01 against the US dollar.

The Hong Kong dollar was trading at HK$ 7.7500 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 trade, the Australian dollar had another strong day, posting its best quarter against the greenback since at least 1985, as optimism the global slump is easing buoyed demand for higher-yielding assets. At the local close, the dollar was trading at $US0.8130, up 1.2 US cents - or 1.5 per cent - from Monday's close of $US0.8009.

In Wellington trades, the New Zealand dollar spent the last day of June treading water around US 65 cents, having regained much of the ground lost during the month.

An improvement in business sentiment in the latest National Bank Business Outlook survey released today made little impact on the kiwi. A net 6 percent of respondents in the June survey expect general business conditions to improve during the next 12 months, up 4 percentage points on May. Also today, the Reserve Bank of NZ said that inflation was not currently considered a threat to the economy, but could return to the fore when the global economy recovers. By its closing, the kiwi was at US 65.16 cents, up from US 64.35 cents late yesterday afternoon.

The South Korean won ended at 1,273.9 won against the greenback, up 11.9 won from Monday's close, as offshore investors increased their holdings of Seoul stocks.

The Taiwan dollar strengthened against the greenback. The Taiwan dollar gained against the US dollar as it was trading higher at NT$ 32.8180, up by NT$ 0.1250 from Monday’s close of NT$32.9430.

Coming back in equities, Asian stock markets were broadly higher, taking their cue from gains on Wall Street with energy stocks buoyed by a continued rise in crude oil prices. In Australia, retailing stocks were helped by improved profit guidance from David Jones.

In Japan, the stock index spurted with broad based gains across thirty-three sectors, on the back of strong gains on Wall Street and Europe and rebound in commodities prices, buoyed by growing hopes that the worst of the global economic slump may be over. The benchmark Nikkei spurted 22.8% for the quarter ended June 30, 2009.

At the closing bell, the Nikkei 225 Stock Average index spurted 174.97 points, or 1.8% to 9,958.44, while the broader Topix index surged 14.44 points, or 1.6% to 930. The benchmark Nikkei 225 index has gained 4.6% for the month ended June, while it ballooned 22.8% in during April-June quarter.

On the economic front, the Ministry of Internal Affairs and Communications said in a monthly report that Japan’s unemployment rate rose to 5.2% in May. The total number of jobless people climbed by 770,000 from a year earlier to 3.47 million.

In Mainland China, stock index reversed early gains to finish the session lower, snapping four days of winning streak, as investors prompted for selling for profit after the key index hit a 12-month high and concern this year’s rally has outpaced earnings prospects and end of first half 2009. The benchmark Shanghai Composite finish April-June quarter 25% higher, and 63% in the first half 2009, buoyed by growing hopes that the worst of the global economic slump may be over.

The Shanghai Composite Index, which covers both A shares and B shares on the Shanghai Stock Exchange, fell 0.54%, or 15.95 points, to 2,959.36, while the Shenzhen Component Index dumped 0.34%, or 38.90 points, to 11,566.61.

The Shanghai Composite has rallied 12.4% for the month ended June, meanwhile spurted 25% in April-June quarter and 63% this year on optimism Premier Wen Jiabao’s 4 trillion yuan ($586 billion) of stimulus plan and record bank lending will revive growth in the world’s third-largest economy.

On the economic front, the National Development and Reform Commission said China raised state-set gasoline and diesel prices to reflect rising global crude costs. The retail price of gasoline rose by 8.6% and that of diesel by 9.6%

The National Development and Reform Commission said that China might not continue purchases of industrial metals for strategic reserves after prices rebounded.

In Hong Kong, stocks declined as the Hang Seng Index, the benchmark after touching the intraday low of 18,364.81 points, the blue-chip Hang Seng Index fell 149.78 points or 0.81% to close at 18,378.73. The Hang Seng China Enterprise Index, which tracks the overall performance of 43 Chinese mainland state-owned enterprises on the Hong Kong Stock Exchange, slid 24.96 points or 0.23% to 10,962.61 points.

In Australia, the stock market surged on the last day of the month on the back of a strong gains on Wall Street and Europe and as energy stocks were buoyed by higher crude oil prices. Miners, energy, and materials led the rally on demand for resources shares, while financials and properties stocks performed strongly. Consumer discretionary was the best performer on improved profit guidance from David Jones.

At the closing bell, the benchmark S&P/ASX200 index surged 68 points, or 1.75%, to 3,954.9, meanwhile the broader All Ordinaries spurted 65.1 points, or 1.68%, to 3,947.8.

The benchmark S&P/ASX200 index gained 3.6% in June, but tumbled 24.25 in the financial year ended June 30, 2009. Meanwhile, the broader All ordinaries rose 3.5% in June, but fell 26% in the financial year ended June 30, 2009.

On the economic front, the Australian bureau of statistic said in a repot that new home sales fell 5.7% in May from the previous month. This was the first drop following four consecutive months of increases as Western Australia witnessed the largest fall of all the states, with a 13.5% slump.

In New Zealand, equity market ended the day in the positive terrain although the share market started the day with a small decline, led by a fall in Telecom. The stock market registered the second consecutive session in the green. The NZX50 ended up 0.76% or 20.99 points to 2796.10. The NZX 15 advanced 0.89% or 45.49 points to close at 5159.28.

On the economic front, New Zealand’s business confidence is improving, but the continuing recession means the economy is still contracting albeit at a slower pace according to National Bank's latest survey of business confidence. The survey shows a net 6 percent of respondents expected general business conditions to improve in the next 12 months. That was up 4 percentage points from the last survey in May. The construction sector, which has been deeply down in the dumps, is now expecting better times ahead. A net 46 percent of firms expect an improvement in conditions- the highest reading in a decade.

Meanwhile, New Zealand central bank in its annual statement of intent, said that the New Zealand economy had been under pressure from the international financial crisis, global recession and weak domestic spending. The threat of inflation has eased, but it may become a problem again once global markets stabilise, the Reserve Bank said.

In South Korea, stocks closed higher as investor sentiment was underpinned by overnight gains in U.S. markets amid rising prospects for an economic recovery. The benchmark Korea Composite Stock Price Index (KOSPI) advanced 1.62 points to 1,390.07.

In Taiwan, stock market closed up, logging the best quarterly gain in eight years as technology sector stocks jumped on expectations of more orders from China. The main Taiex share index gave up yesterday losses as the Taiex index added 41.01 points or 0.64%, closing the day at 6432.16.

On the economic front, Taiwan’s manufacturers and traders received orders totaling US$25.17 billion in May of this year, up by US$100 million from a month earlier. According to the Ministry of Economic Affairs (MOEA) compared to the same month of last year, the order value tumbled by US$6.3 billion or 20.14%. In January of this year the export orders stood at US$17.67 billion, surging to US$20.12 billion in February, growing rapidly to US$23.94 billion in March and US$25.13 billion in April, and edging up to US$25.17 billion in May.

In May alone, the export orders received from Europe dropped an annual 28.01% in value and down by 10.49% from a month earlier, implying a gloomy business climate in Europe. Likewise, the orders from the United States dipped an annual 17.35%.

Influenced by the downturn, many countries have recently hesitated to launch investments. As a result, Taiwan witnessed a sizable annual fall of 44.23% and 33.13% in orders for machinery and basic metals & related products, respectively, in May; while orders for electronic products shrank by 11.33% and those for information technology (IT) and telecom products reduced by 11.9%.

In other economic news, according to the Investment Commission under the Ministry of Economic Affairs, Taiwan saw investments in China dive 65% year-on-year in the first five months of this year, affected by the global recession.

Also Taiwan posted negative growth in incoming investments by overseas Chinese and foreigners as well as outward investments. The Investment Commission’s tallies show the applications by Taiwanese businesspersons to invest in China has been rising starting in June as the Chinese government has offered a flurry of incentives, including subsidizing sales of home appliances in rural region and the launch of Haixi Economic Special Zone, to attract investors from abroad.

An official at the Investment Commission attributed the drop in applications for investing in China to the slump in export orders landed by domestic firms. Domestic firms invested US$1.3 billion in 65 cases in China in the first five months of this year. Operators in electronic components, electronics and computers, retail and wholesale, electronic equipment manufacturing and machinery are the leading investors in China, all of whom cut back in such investments.

The Investment Commission approved 86 investment cases from overseas Chinese and foreigners amounting to US$160 million in May alone, with cumulative investments totaling US$1.67 billion in the first fie months of this year, down 45% from a year before. Taiwanese businesspersons submitted 96 cases, amounting to US$940 million, of overseas investments in the first five months of this year, down 56% year-on-year.

At the same time, Chinese investors will be able to apply for investments in Taiwan from 1 July 2009, following the publication of permitted investment items and associated measures by the Executive Yuan i.e. the Cabinet, scheduled today.

In other economic news, the central bank here showed that due to fierce competition in the home mortgage market, the average home loan rate offered by Taiwan’s five state-linked banks stood at 1.853% per annum in May, the lowest in two months ever recorded.

The five banks are the Bank of Taiwan, Land Bank of Taiwan, Taiwan Cooperative Bank, Hua Nan Commercial Bank and First Commercial Bank. In May the said five banks lent new home loans totaling NT$460.8 billion (US$13.96 billion at US$1 = NT$33), down by NT$130 billion (US$3.94 billion) from a month earlier, with an average rate up 0.071 of a percentage point to 1.536%.

Of all the new loans in May, the home loans posted a slight monthly drop of NT$1.312 billion (US$39.76 million) to NT$41.095 billion (US$1.25 billion) while short-term corporate loans tumbled by NT$115.8 billion (US$3.51 billion).

The low interest rate has helped raise idle funds in the financial market and therefore the central bank currently has seen its certificates of deposit hit a new high of nearly NT$5 trillion (US$151.52 billion).

In Philippines, the stock market closed lower, bucking the trend in the regional markets, which are trading higher. Profit booking activities by investors dragged the composite index lower. Moreover, heavy losses registered by the key heavy weight stocks also brought the benchmark index under pressure. The PSEi closed lower despite the positive news on the economic facade. The benchmark index PSEi plummeted 1.21% or 30.06 points to 2,437.99, while the All Shares index went down 1% or 15.87 points to 1,566.47.

In India, the BSE 30-share Sensex closed down 291.90 points or 1.97% to 14,493.84 while the 50-unit S&P CNX Nifty was ended lower by 99.85 points or 2.27% to 4291.10.

Elsewhere, Malaysia's Kula Lumpur Composite index went down 0.06% or 0.60 points to 1075.24 while Indonesia’s Jakarta composite index ended the day lower at 2026.78.

In other regional market, European shares were flat on the last day of a strong second quarter, with gains for banks and healthcare stocks offsetting losses for food producers. Of regional equity markets, the German DAX index edged down 0.52% to 4,860, the French CAC-40 index slipped 0.39% to 3,181 and the FTSE 100 index dipped 0.25% to 4,284.

Looking ahead, markets will look into conference board consumer confidence in US, which is expected to improve further in June. Chicago PMI is expected to rise further. Canadian GDP will be another focus in the US sessio