Troubled Tuesday reappear in Asian markets reappear

Investors across the region dump shares on renewed economic worries

Stock market in Asian region experience terrific Tuesday on 23 June 2009, as concern about the global economy recovery aggravated, forcing investors across the region to opt out for heavy sales on Tuesday. With prices of crude oil and commodities tumbling down on fears of a sharp fall in demand, resource-related stocks across Asian markets are taking a hammering today. Stocks from banking, automobile and industrial sectors are also plunging sharply on selling pressure.

The World Bank's prediction of a sharper contraction for the global economy had taken a toll of European and U.S. markets on Monday, and it is now the turn of the Asian markets to embark on a journey down south.

On Wall Street, Stocks in New York suffered sharp, broad-based declines on Monday as commodities retreated and the market absorbed a dimmer view of the global economic situation. The Dow Jones Industrial Average fell 200.72 points, or 2.4%, to 8339.01, while the S&P 500 lost 28.19 points, or 3.1%, to 893.04. The Nasdaq Composite gave up 61.28 points, or 3.4%, to 1766.19.

The Dow fell 3% last week as selling interrupted the multiweek rally, and those losses extended into Monday after news that the World Bank cut its 2009 global growth forecast. It now anticipates the world economy will shrink by 2.9%, compared to the 1.9% contraction predicted in March.

In the commodity market, crude oil fell for a third day in New York as equity markets declined amid concerns the recovery in the global economy will be slower than expected.

Crude oil for August delivery declined as much as $1.13, or 1.7 percent, to $66.37 a barrel on the New York Mercantile Exchange. It traded at $66.88 at 10:02 a.m. in London. The July contract expired yesterday at $66.93.

Brent crude oil for August settlement dropped as much as $1.08, or 1.6 percent, to $65.90 a barrel on London’s ICE Futures Europe exchange. It traded at $66.38 at 9:29 a.m. London time.

Gold fell to the lowest in six weeks in London as some investors sold the precious metal to cover losses in equity markets. Bullion for immediate delivery declined as much as $9.46, or 1%, to $913.24 an ounce, the lowest since 12 May 2009. The metal traded at $917.30 at 9:21 a.m. local time. August gold futures lost 0.4% to $917.50 an ounce on the New York Mercantile Exchange’s Comex division.

In the currency market, the Japanese yen continues its strong momentum broadly today on risk aversion. US dollar strengthens against commodity currencies but remains bounded in range against Euro and Swiss. Yen is only currency that display broad based strength today, and has so far climbed over 4% against Aussie this week and over 3.5% again Kiwi. The development in Yen, stocks and treasury yields is likely to remain the major focus in near term.

The Japanese yen strengthened against major currencies on Tuesday. The Japanese currencies strengthen to 95.05 against the US dollar.

The Hong Kong dollar was trading at HK$ 7.7502 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 has closed one and half US cents lower after touching a near four-week low on Tuesday as a sombre global growth forecast by the World Bank caused a sharp sell-off in the local currency. At the local close, the dollar was trading at $US0.7836, down 1.55 US cents - or 1.9% - from Monday's close of $US0.7990. During the day, the local unit moved between a high of $US0.7875 and a low of $US0.7792, its weakest level since 28 May 2009.

In Wellington trades, the New Zealand dollar struggled to make any headway today as investors seeking safer assets deserted it. The kiwi traded between US63.22c and US62.58c during the day, ending at 5pm at US62.77c. That was more than US1c lower than late yesterday afternoon.

The South Korean won ended at 1,290.8 won against the dollar, down 16.3 won from Monday's close. The local unit extended its losing streak to a fifth session as foreign stock selling reduced the currency's demand.

The Taiwan dollar weakened further against the greenback. The Taiwan dollar fell against the US dollar as it was trading lower at NT$ 32.9250, up by NT$ 0.0270 from Monday’s close of NT$32.8980.

Coming back in equities, Asian share markets closed broadly lower, with major indexes posting their biggest one-day losses in weeks on renewed concerns that markets have climbed too much and too fast against a backdrop of uncertainty about the global economic recovery.

In Japan, the stock index retracted, with broad based sell off across the board, on tracking weak leads from Wall Street and Europe overnight on a bleaker-than-expected forecast for the world economy renewed jitters over global economic recovery prospects. Markets were also cautious before a two-day meeting of the Federal Open Market Committee. The Nikkei 225 Stock Average index tumbled 276.66 points, or 2.82% to 9,549.61, while the broader Topix index dropped 20.79 points, or 2.25% to 901.69.

In Mainland China, stock index off an early low to finish the session slightly lower, snapping four days of winning streak, on tracking the Wall Street slump overnight after the World Bank predicted that the world economy will shrink 2.9% in 2009. Investors also booked profit amid worried that the huge run-up in global stock markets over the last three months may have been overdone.

The Shanghai Composite Index, which covers both A shares and B shares on the Shanghai Stock Exchange, dropped 0.1%, or 3.60 points, to 2,892.69, while the Shenzhen Component Index dived 0.58%, or 65.05 points, to 11,125.66.

On the economic front, the Ministry of Finance said in a statement that China would abolish export duties on some grains and industrial products and cut the duties for chemical fertilizers and nonferrous metals from July 1 to promote exports.

In Hong Kong, the Hong Kong stock market sank with broad based losses across the board as World Bank report on the health of global economy unearthed recovery concerns. Shares of materials energy tumbled after the World Bank’s forecast of a deeper global recession sparked a slump in commodities. The Hang Seng Index stumbled 521.18 points, or 2.89%, to 17,538.37, meanwhile the Hang Seng China Enterprise Index tumbled 358.67 points, or 3.37% to 10,280.13.

In Australia, the stock market dropped in broad based sell off following weak leads from Wall Street and Europe overnight on a bleaker-than-expected forecast for the world economy renewed concern over the global economy outlook. At the closing bell, the benchmark S&P/ASX200 index plunged 121.3 points, or 3.1%, to 3,796.9, while the broader All Ordinaries melted 117.8 points, or 3.01%, to 3,793.

On the economic front, the Australian Bureau of Agricultural and Resource Economics said Australia’s copper output for the fiscal year that starts July 1 is set to rise 13% to 1 million metric tons.

In New Zealand, stock market ended the day in the negative terrain after inching up slightly yesterday. The share market dipped down in line with most of the Asian markets that tumbled following a plunge in the United States overnight after a spokesman for US President Barack Obama said overnight unemployment in the world's biggest economy was expected to reach 10% within the next few months, as the global economic crisis rumbles on.

The NZX50 fell 1.18% or 32.905 points to 2762.01. The NZX 15 declined 1.39% or 71.168 points to close at 5057.73.

The domestic share market dipped down following a bleak outlook given by the New Zealand Institute of Economic Research (NZIER). The NZIER predict tough times ahead for the New Zealand economy in its quarterly consensus forecasts wrap for the year to March 2010. Nearly 60,000 Kiwis will lose their jobs over the next year, according to an economic think-tank. According to the survey, the outlook for the economy has worsened, with the economy now expected to shrink 1.6% over the year compared to expectations of a 0.6% contraction three months ago.

In South Korea, stocks closed lower as overnight U.S. tumbles prompted a foreign selling spree. The benchmark Korea Composite Stock Price Index (KOSPI) tumbled 39.17 points to 1,360.54, the lowest level since 29 April 2009.

In Singapore, the stocks index stumbled as investors booked profit amid fretted about the strength of a world economic recovery, fueled by weakness in commodity prices in London and pullback in crude oil prices following weak leads from Wall Street and Europe overnight on a bleaker-than-expected forecast for the world economy from World Bank renewed concern over the global economy outlook. The blue chip Straits Times Index stumbled 40.82 points, or 1.8%, to 2,226.1.

On the economic front, the Department of Statistics said Singapore's consumer price index fell 0.3% year-on-year in May after declining 0.7% in April. Excluding accommodation costs, consumer prices were down 1.5%. Month-on-month, consumer prices rose 0.6% in May, following a 1.1% drop in April. Excluding accommodation costs, consumer prices were unchanged in May.

In Taiwan, stock market retreated from its recent gains, posting its worst daily drop in a week, as World bank report on the health of global economy unearthed recovery concerns, forcing Wall Street stocks for another downhill stroll. The main Taiex share index reverted its recent gains by ending its two session rally as the Taiex index gave up 143.74 points or 2.27%, closing the day at 6197.47, strongest closing since last 18 June 2009 when market closed at 6144.53.

On the economic front, Taiwan’s foreign assets amounted to US$877.8 billion as of the end of 2008, up by US$10.3 billion or 1.2% from a year earlier; if deducting the total foreign liabilities of US$301.1 billion, then Taiwan’s international investment position witnessed a net asset position of US$576.7 billion or nearly NT$19 trillion, the highest of its kind ever recorded, according to the central bank here.

In Philippines, the stock market reversed its yesterday’s gain, closing lower, as investor’s sentiments were weighed down by the negative fiscal performance data released by the bureau of treasury today. Philippines posted a budget deficit in May as the government increased spending and revenue faltered amid slowing economic growth. Moreover, razor sharp losses on Wall Street overnight also forced the investor’s to stay on sideline. At the final bell, the benchmark index PSEi tumbled 1.73% or 41.82 points to 2,370.06, while the All Shares index fell 1.39% or 21.66 points to 1,528.87.

On the economic front, the country’s budget deficit had soared 556.2% year-on-year in the first five months. The government released figures showing it was 123.2 billion pesos (S$3.5 billion) in the red by the end of last month, compared with 18.8 billion pesos at the same point in 2008. The shortfall of 11.4 billion pesos ($234 million) widened the five-month deficit to 123.2 billion pesos. Finance Secretary Margarito Teves told reporters that government spending rose 16% from a year earlier to 115.6 billion pesos for the month, while revenue collection declined 2.5% to 104.2 billion pesos.

In India, The key benchmark indices drifted lower in a highly volatile trade led by losses in banks and metal stocks. Volatility ruled the roost as traders rolled over positions in the futures & options segments to July 2009 series from June 2009 series ahead of expiry of June 2009 contracts on Thursday, 25 June 2009. The BSE 30-share Sensex was down 2.21 points or 0.02% to 14,324.01. The S&P CNX Nifty was added 11.75 points or 0.28% to 4,247.

Elsewhere, Malaysia's Kula Lumpur Composite index went down 0.14% or 1.49 points to 1044.48 while Indonesia’s Jakarta composite index ended the day lower at 1914.38.

In other regional market, European shares moved between gains and losses Tuesday, with investors buying drugmakers but selling banks as they wait for signs that the outlook for economic growth has improved. In the region, the French CAC-40 index traded flat at 3,125, while the U.K.'s FTSE 100 index rose 0.43% to 4,252 and the German DAX index advanced 0.6% to 4,721.