Asian markets kick off week steadily

Hang Seng, Nikkei hold the gains while Sensex, Strait Times close lower

Stock market in Asian region closed mostly higher on Monday, 22 June 2009 with some of them posting fairly sharp gains, despite of lack of trigger from Wall street and some early weakness. The mood remained quite cautious in most of the markets in the region as World Bank revised down in growth prospectus for the world economy.

The World Bank revised down global growth forecast in 2009 from - 1.7% to - 2.9%. 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%. Outlook for emerging markets are mixed with Russia expected to drop - 7.5%, down from - 4.5% and Brazil to contract - 1.1%, down from 0.5%. However, China's economy is expected to expand 7.2%, up from 6.5% while India's economy is expected to expand 5.1%, up from 4.0%.

On Wall Street, stock indices finished a quadruple-witching Friday mixed, with tech stocks outperforming blue-chip names. After rising more than 60 points earlier in the session, the Dow Jones Industrial Average finished lower by 15.87 points, or 0.19%, at 8539.73. The S&P 500 halved its gains but still rose 2.86 points, or 0.31%, to 921.23. The Nasdaq Composite also pared its early winnings but still ended the day up 19.75 points, or 1.09%, to 1827.47.

In the commodity market, crude oil fell for a second day after the World Bank said the global recession will be deeper than expected, stoking concerns that fuel demand will remain depressed.

Crude oil for July delivery fell as much as $1.66, or 2.4%, to $67.89 a barrel in electronic trading on the New York Mercantile Exchange. It was at $68.47 a barrel at 11:37 a.m. London time. The contract expires today. Oil for August delivery, the more-actively traded contract, was at $68.75 a barrel, down $1.27.

Brent crude for August settlement was at $68.24 a barrel, down 92 cents, at 12:35 p.m. London time on London’s ICE Futures Europe exchange.

Gold fell to a one-month low in London as a stronger dollar and lower crude oil diminished the metal’s attraction as a hedge against a weaker U.S. currency and faster inflation. Gold for immediate delivery fell $8.95, or 1 percent, to $925.10 an ounce at 10:51 a.m. local time.

In the currency market, US dollar and Japanese Yen were generally higher as the week started, with Aussie and kiwi being hit most so far. Risk aversion seems to be driving the movements today as the World Bank revised down global growth forecast in 2009 and said prospects for the world's economy remained "unusually uncertain" even though there were signs of improvement in some countries. The World Bank also urged governments to be "vigilant" in planning for exit strategies.

The Japanese yen strengthened against major currencies on Monday after a government report showed that Japan’s business confidence improved in the second quarter and demand for services rose in April, adding to signs the country’s worst postwar recession is easing. The Japanese currency jumped to a 4-day high of 88.78 against the Swiss franc, 95.89 against the US dollar.

The Hong Kong dollar was trading at HK$ 7.7503 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 edged lower today as weaker commodity prices subdued demand for the currency. At the local close, the Australian dollar was trading at $US0.7990, down from Friday's close of $US0.8045.

In Wellington trades, the kiwi ended the day at US 63.95 cents, down from the US64.34c early today and little changed from the US63.85c on Friday. The New Zealand dollar today retreated from the US64.84c level it rose to during the weekend. The kiwi awaits some big events for this week with the Federal Reserve's policy meeting, and New Zealand current account data on Thursday and gross domestic product data on Friday.

The South Korean won ended at 1,274.5 won against the dollar, down 6.1 won from Friday's close. The local unit extended its losing streak to a fourth session as global demand for dollars increased due to rising oil prices.

The Taiwan dollar weakened against the greenback. The Taiwan dollar fell against the US dollar as it was trading lower at NT$ 32.8980, up by NT$ 0.0200 from Friday’s close of NT$32.8780.

Coming back in equities, Asian share markets closed slightly higher though the mood was somewhat cautious after a mixed performance by Wall Street on Friday. Oil and resource stocks were on the decline in Tokyo, though mostly on the rise in Sydney.

In Japan, the stock index finished the choppy session higher, on tracking positive cues from other Asia pacific market. shares of financials, properties, and pharmaceutical shares led the market, after brokerages upgrade their outlook for Japanese banks, while oil and commodity stocks trimmed recent gains amid profit booking as investors waited for key US economic data such as home sales and durable goods orders to be released later this week.

The Nikkei 225 Stock Average index climbed up 40.01 points, or 0.41% to 9,826.27, while the broader Topix index rose 3.51 points, or 0.4% to 922.48.

On the economic front, the Japanese Ministry of Economy, Trade and Industry said in a report that the services sector in Japan showed resurgence in activity in April. The tertiary industry activity index rose 2.2% month-over-month in April following an upwardly revised 2.8% decline in the previous month.

The Ministry of Finance and Cabinet Office survey data showed that the business sentiment index was at minus 22.4 in the second quarter, better than minus 51.3 in the previous quarter. The business survey index (BSI) of sentiment at large manufacturers stood at minus 13.2 in April-June quarter, compared with minus 66.0 in the previous quarter.

In Mainland China, stock index surged enduring gains for fourth straight day, driving the benchmark index to a 11 month high, with gains in financials and properties after World Bank reinforced the belief that the economy was improving after raising its forecast of the country's 2009 economic growth from 6.5% to 7.2% and Premier Wen Jiabao reiterated the government will pursue a moderately loose monetary policy to maintain growth in the world’s third-largest economy.

The Shanghai Composite Index, which covers both A shares and B shares on the Shanghai Stock Exchange, jumped 0.55%, or 15.81 points, to 2,896.30, while the Shenzhen Component Index dumped 0.46%, or 51.58 points, to 11,190.71.

In Hong Kong, the stock market climbed, with broad based gains across in financials and properties after report China’s banks are boosting lending and on the city’s real estate outlook. Shares of energy and materials rebounded on the back of steady commodity prices. Exporters rose on U.S. reports showing jobless claims fell and manufacturing contraction slowed.

The Hang Seng Index leaped 138.62 points, or 0.77%, to 18,059.55, meanwhile the Hang Seng China Enterprise Index jumped 128.95 points, or 1.23% to 10,638.8.

On the economic front, the Census and Statistics Department said Consumer prices in Hong Kong remained flat year-on-year in May, after rising 0.6% in the preceding month

In Australia, the stock advanced, extending gains for second consecutive day, thanks to a firmer commodity prices and positive cues from other Asia pacific market. Financial stocks were modestly stronger while a fall in the price of crude held back the energy sector. Shares of miners and materials surged on the back of rebound in base metal prices. Retailers and healthcare shares were also in above the line on bottom fishing.

At the closing bell, the benchmark S&P/ASX200 index surged 18.6 points, or 0.48%, to 3,912.2, while the broader All Ordinaries spurted 16.4 points, or 0.42%, to 3,910.8.

On the economic front, the Australian Bureau of Statistics said new motor vehicle sales climbed 5.4%, seasonally adjusted, to 75,472 units in May, up from 71,626 units in April.

In New Zealand, equities commenced the first trading day in the positive terrain on Monday. The NZX50 advanced 0.38% or 10.64 points to 2794.91. The NZX 15 ascended 0.49% or 25.16 points to close at 5128.89.

On the economic front, the Securities Commission is highlighting areas of concern in financial reporting after reviewing financial statements of 24 issuers. The regular review by the regulator of investments comes at a time when the New Zealand Shareholders' Association has been writing to companies asking for more information about debt, including bank covenants. The commission also highlights the reporting of debt as a significant matter. It wants issuers to report any change in, or review of, funding arrangements and the impact on classification of debt and the going concern assumption.

In South Korea, stocks closed 1.18% higher Monday as institutional and foreign investors hunted for bargains. The benchmark Korea Composite Stock Price Index (KOSPI) climbed 16.37 points to 1,399.71.

In Singapore, the stocks index off an early high to finish the session lower, as investors booked profit amid cautious whether the global economy is headed toward a recovery, fueled by weakness in commodity prices in London and pullback in crude oil prices in Asian trade. Miners and manufacturers were hit by falling metal prices. Financials gave back early gains as caution prevailed ahead of the U.S. Federal Reserve meeting on interest rates later in the week. The blue chip Straits Times Index stumbled 6.26 points, or 0.3%, to 2,266.92.

In Taiwan, stock market carried its weekend gains, as technology shares including LCD maker AU Optronics rose after the company announced a new venture with one of China's top TV makers Sichuan Changhong. The main Taiex share index consolidated its gains in second session as the Taiex index added 110.06 points or 1.77%, closing the day at 6341.21, strongest closing since last 12 June 2009 when market closed at 6448.23.

In Philippines, the stock market opened the week on a positive note, reversing the four days losses, assisted by the hefty gains registered by the key heavy weight indices, mainly the property indices, which escalated nearly 2%. Moreover, investor’s engaged in bargain hunting activities, which also dragged the PSEi higher. The benchmark index PSEi climbed 0.56% or 13.58 points to 2,411.88, while the All Shares index rose 0.35% or 5.43 points to 1,550.53.

In India, the key benchmark indices extended last week's losses tracking weak European stocks and lower US index futures. Volatility was immense. The BSE 30-share Sensex was down 195.67 points or 1.35% to 14,326.22. The S&P CNX Nifty was down 78.35 points or 1.82% to 4,235.25.

Elsewhere, Malaysia's Kula Lumpur Composite index went down 1.28% or 13.53 points to 1045.97 while Indonesia’s Jakarta composite index ended the day lower at 1975.03.

In other regional market, sharp gains from Anglo American shares didn't translate into a positive session for the broader European equity market on Monday, as oil producers came under pressure. On a regional level, the U.K. FTSE 100 index fell 1.17% or 50.91 to 4,295, the German DAX index lost 1.25% or 60.38 points to 4,779 and the French CAC-40 index declined 1.44% or 46.22 to 3,175.

On the economic front, ECB president Trichet urged governments in the euro region to start cutting down budget deficits. He said that simulative packages thus far have been "completely extraordinary" and are therefore "sufficient." He said, "There is a moment where you can't spend any more and you can't accumulate any more debt. I think we are at that moment." Also Trichet said that geo-political tension in Iran is a risk factor on the international economy. Iran is a part of a wider analysis that "would be associated with risks for the oil markets, not just because of Iran but because of the whole region."

On the data front, UK Rightmove House Prices dropped 0.4% month on month in June. Japanese BSI Large manufacturing index dropped 13.2 quarter on quarter in second quarter. Tertiary Industry Index rose 2.2% month on month in April. Main focus today is on Germany Ifo business climate, which is expected to continue to improve to 85 in June.