Asian markets marks Tuesday with a turnaround

Sydney, Sensex, Hang Seng post over 3% gain while Shanghai, Nikkei add up more than 2% to its value

Stock market in Asian region showed a strong recovery on Tuesday, 14 July 2009 following the strong overnight surge on Wall Street on the back of an analyst upgrade on U.S. banks and optimism about earnings bringing investors back into the buying mode.

On Wall Street, banks led the major indices more than 2% higher Monday as Wall Street prepared for an onset of second-quarter earnings. The Dow Jones Industrial Average was up 184.16 points, or 2.3%, at 8331.68, while the S&P 500 tacked on 21.92 points, or 2.5%, to 901.05. The Nasdaq Composite gained 37.18 points, or 2.1%, to 1793.21.

In the commodity market, Crude oil rose for the first time in three days on signs of recovery from the global recession; prompting optimism fuel demand will increase.

Crude oil for August delivery gained as much as 69 cents, or 1.2%, to $60.38 a barrel on the New York Mercantile Exchange. The contract was at $60.12 at 1:32 p.m. Singapore time. Yesterday, it fell 20 cents to $59.69 a barrel, the lowest settlement since 19 May 2009.

Brent crude oil for August settlement rose as much as 70 cents, or 1.2%, to $61.39 on London’s ICE Futures Europe Exchange. It ended the session yesterday at $60.69.

Gold declined in Asia as a rebound in stocks, driven by optimism that the global economy is recovering, eroded demand for the precious metal as an alternative investment. Gold for immediate delivery fell as much as 0.2% to $918.15 an ounce and traded at $918.75 at 11:02 a.m. in Singapore. Bullion for August on the Comex division of the New York Mercantile Exchange lost as much as 0.5% to $917.80.

In the currency market, US dollar and yen retreated sharply following yesterday's rebound in US stocks.

The Japanese yen softened against major currencies on Tuesday. The Japanese currencies were quoted at 93.16 against the greenback.

The Hong Kong dollar was trading at HK$ 7.7504 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 staged a comeback, bolstered both by a robust economic report at home that backed views interest rates are unlikely to be cut further and by some easing in global risk aversion. The dollar climbed as high as $US0.7861, up from a near eight-week low of $0.7700 on Monday, after a survey of Australian businesses found a surprisingly strong rebound in activity. It closed locally at $US0.7850, up from yesterday's close of $US0.7733.

In Wellington trade, the kiwi ended at US63.36c, US1c higher than 24 hours earlier. It ranged between US63.20c and US63.47c during New Zealand trading hours. The New Zealand dollar traded in a narrow range in today's domestic session of the forex market, but firmed after Reserve Bank Governor Alan Bollard said New Zealand's economy is likely to recover sooner than many of its trading partners.

The South Korean won ended at 1,293 won against the greenback, up 22 won from Monday'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 was trading higher at NT$ 33.0820, up by NT$ 0.1110 from Monday’s close of NT$33.193.

Coming back in equities, Asian shares ended higher Tuesday after strong overnight gains on Wall Street, with commodity stocks buoyed by a bounce in metal and oil prices.

In Japan, the benchmark indices surged, snapping its nine days of loosing streak, on tracking strong cues from Wall Street overnight and as investors bought back a wide range of battered shares from the recent losses. Banks and financials led the rally on upbeat analyst comment about US financials. At the closing bell, the Nikkei 225 Stock Average index gained 2.34%, or 211.48 points, to 9,261.81, while the broader Topix index rose 1.9%, 16.15 points, to 868.57.

In Mainland China, stock market spurted, snapping two days of decline on expectations economic growth may have accelerated in the second quarter. Financials and materials led the rally on optimism the nation’s economic growth is poised to exceed forecasts.

The Shanghai Composite Index, which covers both A shares and B shares on the Shanghai Stock Exchange, climbed up 2.1%, or 64.6 points, to 3,145.15, while the Shenzhen Component Index added 2.61%, or 330.52 points, to 12,991.06.

In Hong Kong, the benchmark index bloated up, outperforming global leads following yesterday’s sell-off. Financials led the rally, driven by outstanding performance from insurance and brokerage shares. Materials and energy shares were above the line on steady crude oil and base metals prices. Shares of China-based companies climbed up on hopes economic growth might accelerate in the second quarter.

The Hang Seng Index spurted 631.1 points, or 3.66%, to 17,885.73, while the Hang Seng China Enterprise Index surged 372.61 points, or 3.62%, to 10,651.86.

In Australia, the stock market continues to advance throughout the day to eventually close higher, with broad based gain across the sector, led by properties and financials on expectation the key financial institutions of US would post better earnings than originally forecast. Materials and resources bounced on the back of rebound in metal prices. Energy shares recouped as of firmer oil prices in Asian trade. Meanwhile, buying pressure was evident in healthcare, telecom, and industrial stocks.

At the closing bell, the benchmark S&P/ASX200 index spurted 129.6 points, or 3.47%, to 3,867.1, meanwhile the broader All Ordinaries surged 120.8 points, or 3.23%, to 3,858.8.

On the economic front, the National Australia Bank survey found that business confidence rose 6 points in June to 4 points after holding below zero for the previous 17 months. A figure above zero shows optimists outnumber pessimists.

In New Zealand, equities witnessed a decent performance in line with most of the Asian markets that are trading higher Tuesday, trailing strong performance on Wall Street overnight. The New Zealand share market opened strong today, gaining 10 points in early trading after yesterday's lackluster performance. The domestic share market ended its three-day losing streak on Tuesday. The NZX50 moved up 0.42% or 11.61 points to 2748.50. The NZX 15 increased 0.45% or 22.69 points to close at 5081.67.

On the economic front, according to Reserve Bank Governor Alan Bollard, New Zealand’s household savings, investment in the tradable sector, and deeper funding markets are the key to the economy’s recovery. Also, he further stated that early signs of global recovery have now emerged. However, he believes the world growth to be subdued for the next one or two years, and the current low international interest rates, expansion of liquidity and central bank balance sheets, and fiscal stimuli will be necessary for some time.

Also, Reserve Bank says, swine flu is likely to have little impact on the New Zealand economy. The central bank has prepared a paper looking at the potential effects of the current global pandemic. Based on what it terms the "baseline" assumptions about the likely rates of infection in this country, the RBNZ estimates that economic output may decline by only 0.62 percent this year. The assumptions are based around Ministry of Health estimates of 200 influenza deaths for the entire New Zealand population.

Meanwhile, New Zealand businesses are showing self-reliance in the face of the economic downturn, as per business NZ. Mood of the Boardroom, run jointly by Business NZ and the NZ Herald, surveys around 300 company directors and chief executives from range of New Zealand enterprises on key business issues.

In South Korea, stocks closed up on Tuesday as investors picked up tech, steel and financial shares, bolstered by overnight rallies in U.S. markets. The benchmark Korea Composite Stock Price Index (KOSPI) rose 7.44 points to 1,385.56 after jumping as much as 23.88 points in early trading.

In Singapore, the stock market surged on tracking strong cues from Wall Street overnight and other Asian bourses. Financials and properties led the rally after trade ministry of Singapore upgraded economic growth forecast for Singapore. Meanwhile buying pressure was evident in manufacturing, transportation, services, and construction shares. The blue chip Straits Times Index added 43.91 points, or 1.94%, to 2,310.55.

On the economic front, the Ministry of Trade and Industry said 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%.

The Ministry also revised upwards the first quarter results. The report said, on a seasonally adjusted and annualized basis, the real GDP contracted 12.7% in the first quarter compared to the fourth quarter. This is an improvement over the 14.6% contraction estimated in May and a 19.7% fall estimated in April. On a yearly basis, the economy contracted 9.6%.

In Taiwan, Stock market in Taiwan rebounded from yesterday’s debacle witnessing a tremendous Tuesday, as all major sectoral indices ended on the higher side. Today’s gain was supported by the official news from Yiin Chii-min, economics minister, Ministry of Economic Affairs (MOEA), who declared that Taiwan and China are expected to start talk on cross-Taiwan Strait Economic Cooperation Framework Agreement (ECFA) in October after the completion of the study on the topic.

Yiin made the remark in the wake of a plunge of 239 points of 3.53% in the Taiex index yesterday, triggered by the report of Lai Shin-yuan, minister of the Mainland Affairs Council (MAC) on 11 July 2009 that the Economic Cooperation Framework Agreement might not be included on the agenda of the talk between P.K. Chiang, chairman of Straits Exchange Foundation, and Chen Yunlin, chairman of the Association for Relations Across the Taiwan Straits, in the second half, due to the lagging of the preparation work. The main Taiex share index witnessed a good rebound from yesterday’s debacle as the benchmark index jumped by 108.59 points or 1.66%, closing the day at 6639.41.

In Philippines, the stock market overturned yesterday’s losses, closing marginally higher, amid positive sentiment in the market due to the steady disinflation that led to another rate reduction by the central bank last week. Moreover, overnight gains in Wall Street also acted as a helping hand for the PSEi to scale up. Furthermore, hefty gains in the key heavy weight stocks also dragged the composite index higher. At the final bell, the benchmark index PSEi ascended 0.35% or 8.91 points to 2,492.30, while the All Shares index rose 0.15% or 2.54 points to 1,597.19.

In India, firm global markets and forecast of increase in rains in the coming days boosted the domestic bourses. Power, metal, capital goods and realty stocks led the gains. The S&P CNX Nifty regained the psychological 4,000 mark within a day of falling below that level on Monday, 13 July 2009. All the sectoral indices on BSE were trading in green. The BSE 30-share Sensex jumped 453.38 points or 3.38% to settle at 13,853.70. The S&P CNX Nifty was up 137.35 points or 3.46% to 4,111.40.

Elsewhere, Malaysia's Kula Lumpur Composite index went up 1.50% or 15.97 points to 1063.66 while stock markets in Indonesia’s Jakarta Composite index ended the day lower at 2056.58.

In other regional market, gains from the banking sector helped European shares to rise for a second straight session on Tuesday, with earnings from the U.S. expected to provide clues of how the sector has held up in the second quarter. On a regional level, the U.K. FTSE 100 index rose 0.7% to 4,231.16, the German DAX index advanced 0.8% to 4,761.45 and the French CAC-40 index traded up 0.6% at 3,069.26.