Asian Markets ends higher

Hang Seng, Sensex; Seoul added more than 2% Nikkei post marginal gains

Stock market in Asian region ended the day in positive territory for the second straight session on Wednesday, 15 July 2009 following the confident closing from the Wall Street after a better than expected results from Goldman Sachs and Intel Corporation as well as fairly decent growth in retail sales, as investors started picking up stocks on renewed hopes about a global economic recovery.

On Wall Street, stocks closed slightly to the upside Tuesday after a mixed bag of economic data and earnings, including better-than-expected quarterly performances out of Goldman Sachs and Johnson & Johnson. The Dow Jones Industrial Average rose 27.81 points, or 0.3%, at 8359.49, while the S&P 500 climbed 4.79 points, or 0.5%, to 905.84. The Nasdaq Composite edged up 6.52 points, or 0.4%, to 1799.73.

In the commodity market, crude oil rose for the first day in four before a report forecast to show that U.S. crude-oil inventories contracted for a fifth week.

Crude oil for August delivery gained as much as $1.17, or 2 percent, to $60.69 a barrel on the New York Mercantile Exchange. The contract traded at $60.26 at 10:04 a.m. London time. Yesterday, it declined to $59.52, the lowest settlement since 18 May 2009.

Brent crude for August settlement rose as much as $1.12, or 1.8 percent, to $61.98 on London’s ICE Futures Europe Exchange, and traded at $61.83 at 9:22 a.m. London time. The contract expires tomorrow.

Gold stalled near a one-week high in Asia as the improved U.S. economic outlook reduced investor demand for a haven and purchases for jewelry making slowed. Gold for immediate delivery traded at $926.01 an ounce at 12:59 p.m. in Singapore after rising 0.6 percent yesterday. Bullion for August delivery on the Comex division of the New York Mercantile Exchange gained 0.3 percent to $925.90 an ounce after settling little changed at $922.80 yesterday.

In the currency market, US dollar and yen continue to lose ground on broad based rally in Asian stocks.

The Japanese yen softened against major currencies on Wednesday. The Japanese currencies were quoted at 93.6 against the greenback.

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 firmed while bond futures suffered their biggest losses in a month as investors bet the US earnings season would produce enough upside surprises to keep riskier assets in vogue. At the local close, the dollar was trading at $US0.7965, up from $US0.7850 at yesterday's finish and a $US0.7700 trough early in the week.

In Wellington trade, the New Zealand dollar rose as investors regained their appetite for risk. The NZ dollar was at US64.07c at 5pm today, up from US63.36c at 5pm yesterday.

The South Korean won ended at 1,278.5 won against the greenback, up 14.5 won from Tuesday's close, as stock gains and eased financial woes helped reduce investors' appetite for safer bets.

The Taiwan dollar strengthened against the greenback. The Taiwan dollar gained against the US dollar as it closed trading at NT$ 32.9750, up by NT$ 0.1250 from Monday’s close of NT$33.090.

Coming back in equities, Asian share markets extended gains, as technology stocks got a lift from Intel Corporation’s optimistic earnings outlook. Financial stocks also traded broadly higher in the wake of strong second-quarter results from Goldman Sachs Group, while resource stocks stretched their advance on an increase in commodity prices.

In Japan, the benchmark indices erased most of early gains to eventually close flat, on the back of losses from major banks and properties on speculation non- performing loan are increasing and on cautious ahead of domestic corporate earnings reports to be released starting next week. Some of the exporters turned lower.

At the closing bell, the Nikkei 225 Stock Average index gained 0.08%, or 7.44 points, to 9,269.25, while the broader Topix index trimmed 0.2%, 2.2 points, to 866.

On the economic front, the Bank of Japan's kept its key interest rate unchanged at 0.1% amid signs the world's second-largest economy has ended its slide. The central bank said in a statement that Japan's economic conditions have stopped worsening and public investment is increasing and exports and production are picking up. Business sentiment, especially of large manufacturing firms, has stopped deteriorating. The Bank of Japan extended its corporate funding support measures beyond their planned expiry in September, and it kept interest rates on hold. The impact was limited as the moves were within expectations.

In Mainland China, stock market continues to advance throughout the day to eventually close higher, as investors became hopeful for global economic recovery after upbeat results from Goldman Sachs and Intel. The Shanghai Composite Index, which covers both A shares and B shares on the Shanghai Stock Exchange, climbed up 1.38%, or 43.39 points, to 3,188.55, while the Shenzhen Component Index added 0.68%, or 88.19 points, to 13,079.26.

On the economic front, the People’s Bank of China said China’s foreign-exchange reserves topped $2 trillion for the first time as overseas investors became more confident that the nation’s economy is recovering.

The Commerce Ministry said foreign direct investments into China slipped for nine consecutive months to $8.96 billion in June, decline 6.8% from year-on-year. Meanwhile, outward direct investments in non-financial sectors declined 51.7% year-on-year in the first six months of the year to US$12.5 billion.

In Hong Kong, the benchmark index bloated up on tracking strong cues from Wall Street overnight and other Asian bourses. Financials and properties stocks spurted on reinforcing sentiments for a global economic recovery after Goldman Sachs posted better than expected earning and as the sign of nation’s economic recovery prompted investors to pump money into market.

The Hang Seng Index spurted 372.93 points, or 2.09%, to 18,258.66, while the Hang Seng China Enterprise Index surged 208.8 points, or 1.96%, to 10,860.66.

In Australia, the stock market endured gains for second day in row, with broad based gain across the sector. Materials and resources and energy led the rally after metal and crude oil prices rebounded. Banks and financials rose on reinforcing sentiments after Goldman Sachs posted better earnings than expected. Meanwhile, buying pressure was evident in healthcare, telecom, and retailers stocks.

At the closing bell, the benchmark S&P/ASX200 index spurted 57.4 points, or 1.48%, to 3,924.5, meanwhile the broader All Ordinaries surged 58.7 points, or 1.52%, to 3,917.5.

In New Zealand, equities continued it upward journey registering its second day of gain in a row on Wednesday. The NZX50 moved up 0.57% or 15.58 points to 2764.08. The NZX 15 increased 0.38% or 19.25 points to close at 5100.91.

On the economic front, Business NZ says the Government’s medium term plan for economic growth is relevant and timely. The Prime Minister unveiled a 6-pronged approach for growth and jobs, focusing on regulation, infrastructure, public services, skills, innovation and tax. Business NZ Chief Executive Phil O’Reilly said business had been looking for the Government to set out a framework that would provide certainty for businesses to get on with productive endeavors.

In South Korea, stocks closed up as foreign investors picked up tech, bank and other large-cap shares, encouraged by overnight advances in U.S. markets. The benchmark Korea Composite Stock Price Index (KOSPI) rallied 35.3 points to 1,420.86.

In Singapore, the stock market endured gains for second consecutive day, on tracking strong cues from Wall Street overnight and other Asian bourses. Financials and properties extended gains for second day after trade ministry of Singapore upgraded economic growth forecast for Singapore, meanwhile Goldman Sachs better earnings than expected supported the rally. The blue chip Straits Times Index added 78.87 points, or 3.41%, to 2,389.42.

On the economic front, the statistics department of Singapore said Wednesday that retail sales fell 10.3 percent from a year earlier. On monthly basis, the retail sales climbed a seasonally adjusted 0.8% month-on-month in May.

The Ministry of Trade and Industry said on Tuesday that Singapore’s gross domestic product will shrink between 4% and 6% this year, less than an earlier forecast for a contraction of as much as 9%.

In Taiwan, stock market stretched gains for the second straight session after a slew of strong earnings in the United States; with top contract chipmaker TSMC leading gains on an optimistic outlook by chip giant Intel. The main Taiex share index consolidated yesterday’s gains as the benchmark index rose by 99.19 points or 1.49%, closing the day at 6738.60.

On the economic front, Taiwan collected a record low NT$857.9 billion (US$26 billion at US$1 = NT$33) in taxes in the first half of this year, plummeting NT$190.1 billion (US$5.76 billion) or 18.1% from the corresponding figure of last year.

According to the Ministry of Finance (MOF) prediction the tax revenues are likely to be around NT$200 billion (US$6.06 billion) short of the target for 2009, the first shortfall seen in six years.

In Philippines, the benchmark index sustained its upward trend for the second consecutive day, closing higher, amid positive sentiment in the market following positive news on the domestic front. Moreover, the composite index was lifted by Wall Street's rally overnight. Furthermore, hefty gains in the key heavyweight stocks also assisted the PSEi to scale up. The benchmark index PSEi ascended 0.94% or 23.65 points to 2,515.95, while the All Shares index mounted 0.38% or 6.09 points to 1,603.28.

On the economic front, remittances are expected to rise 2 to 3% in May this year after new overseas Filipino workers (OFWs) were deployed abroad, the Philippines’ central bank said. Although remittance growth may only be slower at single-digit levels this year, cash sent home by OFWs will not decline, central bank added. With these latest projections, remittances may reach $1.442 billion for May, from last year’s $1.4 billion, thanks to sustained demand for Filipino workers abroad.

In India, the key benchmark indices jumped sharply in the last one hour of trade as index heavyweight Reliance Industries surged. Metal, power, capital goods and power stocks rose. The market breadth, indicating the overall health of the market, was strong.

The BSE 30-share Sensex closed up 399.54 points or 2.88%, as firm global markets boosted sentiment for the second day in a row. The barometer index crossed the psychological 14,000 mark ending the day at 14253.24. The S&P CNX Nifty was up 122.10 points or 2.97% to 4,233.50.

Elsewhere, Malaysia's Kula Lumpur Composite index went up 1.63% or 17.61 points to 1097.24 while stock markets in Indonesia’s Jakarta Composite index ended the day higher at 2123.28.

In other regional market, European shares climbed for the third straight session on Wednesday, with technology stocks notably higher as adjusted results from Intel added to positive sentiment about the current earnings season. On a regional level in Europe, the U.K. FTSE 100 index climbed 1.55% or 65.56 points to 4,303, the German DAX index rose 1.3% to 4,844.63 and the French CAC-40 index advanced 53.38 points or 1.73% to 3,135.

Looking ahead for the day, a number of important economic data are scheduled to release in US session today. US Consumer Price Index and core consumer price index are expected to drop further in June. While the empire state-manufacturing index is likely to improve in July. Industrial production also expected to improve with drop in capacity utilization.

However, focus of the evening will be on June's FOMC minutes which will emphasize the Fed's stance that the pace of economic contraction has slowed while the risk of deflation is of less concern.

At the meeting in June, the Fed made no change on the size of the $1.75 trillion asset purchase program. It's also surprising that the compositions of the purchases have also been left unchanged. On the other hand, it may reflect that some policymakers were averse to buying Treasury further as the Fed has been questioned about its independence. The Fed will also release its upgraded second half of 2009 growth forecasts in the minutes.