Asian markets make headway on Monday

Hang Seng; Sensex posted more than 3% return while Shanghai, Seoul nears 3% mark

Stock market in Asian region extended their rally on Monday, 20 July 2009, tracking gains posted by Wall Street last Friday, investors purchased stocks on the back of fairly impressive quarterly results and on hopes of an economic revival. Higher commodity prices and better-than-expected data on U.S. housing starts also contributed to the firm trend in the region rally.

On Wall Street, the major stock averages each locked in 7% gains for the week after a final mixed session that featured earnings reports from General Electric, Citigroup and Bank of America. The Dow Jones Industrial Average rose 32.13 points, or 0.4%, to 8743.94, while the S&P 500 was down 0.36, or 0.04%, at 940.38. The Nasdaq Composite added 1.58 points, or 0.08%, to 1886.61. While stocks were relatively tame Friday, the Dow advanced 7.2%, the S&P added 7%, and the Nasdaq was 7.4% higher for the five-day session.

New data on Friday also offered some support to the bulls as building permits and housing starts for June both increased. The Department of Commerce said there were 563,000 new building permits, up from 518,000 the month prior and there were 582,000 housing starts, up from an upwardly revised 562,000.

In the commodity market, crude oil rose for a fourth day on speculation demand will increase as stock markets advanced and Chinese refiners boosted processing to a 16-month high.

Crude oil for August delivery rose as much as 73 cents, or 1.2 percent, to $64.29 a barrel in after-hours electronic trading on the New York Mercantile Exchange. Prices were at $64.25 at 2:10 p.m. Singapore time.

Brent crude for September settlement gained as much as 62 cents, or 1%, to $66 a barrel on London’s ICE Futures Europe Exchange.

Gold gained for a second day in Asia as higher oil prices and a weaker dollar prompted investors to seek the precious metal as a store of value. Gold for immediate delivery gained 0.5% to $941.97 an ounce at 1:22 p.m. in Singapore.

In the currency market, Japanese yen crosses were trading broadly high as the week starts on further improvement in risk appetite of global investors. Asian stocks are broadly higher on news that CIT Group will avoid bankruptcy by closing a deal with bondholders for $3b in emergency funding. The development in yen crosses are significant as the rebound from earlier July is now displaying a five-wave structure which in turn solidify the case that prior highs in June are not the top yet. Outlook in yen crosses are now back inline with dollar and risk sentiments.

The Japanese yen softened against major currencies on Monday. The Japanese currencies were quoted at 94.58 against the greenback.

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 firmed after investor appetite for risk boosted both commodity prices and the local share market. At the local close, the dollar was trading at $US0.8085, up from Friday's close of $US0.7997. During the domestic session, the unit moved between a low of $US0.8005 and a high of $US0.8094.

In Wellington trade, the New Zealand dollar rose slightly today against a global backdrop of improved appetite for risk. The NZ dollar was buying US64.80c at 5pm, up from US64.40c at 8am, a level, which was unchanged from Friday at 5pm.

The South Korean won finished 1,250.2 won versus the U.S. greenback, up 9.3 won from Friday's close, as strong foreign stock buying boosted demand for the won.

The Taiwan dollar strengthened against the greenback. The Taiwan dollar gained against the US dollar as it was trading higher at NT$ 32.7940, up by NT$ 0.1610 from Friday’s close of NT$32.955.

Coming back in equities, Asian stocks raced ahead Monday, sending some regional indexes to their highest finishes in several months on optimism about corporate earnings reports. Stock market in Japan was closed on account of Ocean Day and the Indonesian market is closed for Isra Mi'raj.

In Hong Kong, the benchmark index endured gains for fifth consecutive day, on the back of strong gains from banks and insurance, and properties following share price forecast upgrade from brokerages and on optimism record bank lending will revive the economy. Materials and energy stocks spurted as commodities prices extended gains on optimism recovering global economy will revive the demand. Shipping shares rose in raising Cargo rate. The Hang Seng Index spurted 696.71 points, or 3.7%, to 19,502.37, while the Hang Seng China Enterprise Index surged 446.70 points, or 4.01%, to 11,593.13.

In Australia, the stock market endured gains for fifth day in row, on the back of firmer commodity prices and a continued rally on Wall Street. Shares of mining, materials and energy companies outperformed in the market on strong base metal and crude oil prices amid expectation of demand recovery. Property trusts and financials spurted on hopes the global economy will soon return to growth. At the closing bell, the benchmark S&P/ASX200 index spurted 49.5 points, or 1.24%, to 4,050.3, meanwhile the broader All Ordinaries surged 51.3 points, or 1.28%, to 4,044.2.

On the economic front, the Australian Bureau of Statistics said Australia’s Producer prices dropped 0.8% sequentially in the second quarter, after falling 0.4% in the first quarter. The statistical bureau said the fall in producer price was mainly due to a 5.6% drop in prices of industrial machinery, and equipment manufacturing, a 0.5% fall in building construction and 10.5% decline in that of electronic equipment manufacturing. On year on year, producer prices climbed 2.1% in the quarter ended June 2009.

In New Zealand, equities commenced the first trading day of the week in the positive region in line with most of the Asian markets that are trading higher. The share market registered the fifth consecutive day of gain on Monday. As per the provisional figures at the closing bell, the NZX50 advanced 0.45% or 12.693 points to 2820.91. The NZX 15 was up 0.47% or 24.58 points to close at 5220.02.

On the economic front, New Zealand’s service sector contracted more quickly in June than in May, but the latest Performance of Services Index (PSI) showed the reading for new orders crept into positive territory last month. The PSI, produced by BNZ Capital and Business NZ, dropped to a reading of 45 in June, down 1.2 points from May. A PSI reading above 50 indicates the service sector is generally expanding, below 50 that it is declining. Among the five diffusion indexes, which make up the PSI, new orders/business tipped into positive territory for the first time since March, and for only the third time in 10 months, with a reading of 50.8.

In South Korea, stocks closed higher, buoyed by corporate earnings hopes and relieved concerns over the feared failure of a big U.S. bank. The benchmark Korea Composite Stock Price Index (KOSPI) jumped 38.41 points to a 10-month high of 1,478.51, marking a five-day gaining streak.

In Singapore, the stock market climbed up, extending its northward march for the fifth successive session, inspired by positive earnings results out of the US and higher oil and metal prices. Banks, properties, and constructions were steady after upbeat earning from US peers reinforcing optimism about global economy revival. Shares of manufacturing and multi-industries rose amid signs of a turnaround in key economies in the global market and an improvement in commodity prices. The blue chip Straits Times Index spurted 25.19 points, or 1.04%, to 2,456.15.

In Taiwan, stock market in Taiwan stretched its upward run for fifth session, starting the week on positive note by taking cues from the strong weekly gains put up on Wall Street. The main Taiex share index extending gains for fifth straight session as the benchmark index added 87.87 points or 1.28%, closing the day at 6938.86, highest closing since 1 June 2009 when market closed the day at 6954.10.

On the economic front, the used-car market in Taiwan saw a 9.2% year-on-year growth in June. Statistics compiled by Ministry of Transportation and Communications (MOTC) showed that 60,952 used-cars were transferred in June, a 9.2% year-on-year increase; while in the first six months 323,951 units were transferred, a 6.8% year-on-year drop.

In Philippines, the Philippines stock market closed more than 1% higher, as investors became optimistic over positive economic forecast. Improved economic prospects for the United States will likely help boost the Philippines’ growth this year, the central bank said. The benchmark index PSEi mounted 1.32% or 33.95 points to 2,587.91, while the All Shares index rose 1.19% or 19.44 points to 1,646.84.

In India, the key benchmark indices clocked strong gains, extending last week's sharp climb, as encouraging Q1 June 2009 results from India Inc and firm global stocks boosted sentiment.

The BSE 30-share Sensex closed up 446.09 points or 3.03% at 15,191.01. At the day's high of 15,209.36, the Sensex rose 464.44 points in late trade, its highest since 15 June 2009. At the day's low of 14,854.17, the Sensex rose 109.25 points in early trade. The S&P CNX Nifty was up 127.30 points or 2.91% to 4,502.25.

Elsewhere, Malaysia's Kula Lumpur Composite index went up 1.64% or 18.35 points to 1139.25.

In other regional market, European shares gained ground again on Monday, with banks some of the strongest performers as earnings remained a focus and following reports that U.S. lender CIT will be bailed out. The U.K. FTSE index climbed 1.5% to 4,454.75, the French CAC-40 index advanced 1.6% to 3,268.97 and the German DAX index rose 1.5% to 5,052.79.

Looking ahead, the calendar is light today with UK M4 money supply, Canadian international securities transactions, wholesale sales and US leading indicators featured later.