Asian markets witness weak Wednesday

Hang Seng, Sensex lead the regional losses as investors turn cautious over the health of global economy

Stock market in Asian region remained weak on Wednesday, 8 July 2009, as investors tried to book some profits on renewed concerns over the state of global economy.

On Wall Street, stocks slipped once again pressured by slipping crude price. All ten sectors fell today at Wall Street. The worst performing areas were industrials, technology, energy and materials sectors. The defensive-oriented healthcare sector outperformed on a relative basis. The Dow Jones Industrial Average ended lower by 161 points at 8,163. The Nasdaq Composite Index, ended lower by 41 points at 1,746. S&P 500 ended lower by 18 points at 881.

In the commodity market, crude oil fell, poised for the longest losing streak since December, as equities slumped and an industry report showed an increase in U.S. fuel inventories.

According to the API report, crude oil inventories dropped 1.4 million barrels to 348.3 million. Stockpiles of distillate fuel, a category that includes heating oil and diesel, climbed 3.42 million barrels to 158 million, the highest since 1985. Gasoline supplies rose 767,000 barrels to 212.4 million last week. The API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the Energy Department for its weekly survey.

Crude oil for August delivery fell as much as $1.06, or 1.7%, to $61.87 a barrel on the New York Mercantile Exchange, the lowest intraday price since May 26. Oil was at $62.19 a barrel at 2:51 p.m. Singapore time.

Brent crude for August settlement declined as much as 93 cents, or 1.5 percent, to $62.30 a barrel on London’s ICE Futures Europe exchange. It was at $62.57 a barrel at 2:50 p.m. Singapore time. Yesterday, the contract fell 1.3 percent to $63.23, the lowest settlement price since May 27.

Gold fell for a third day in Asia as the dollar advanced against the euro and crude oil tumbled, reducing demand for the precious metal as a store of value. Gold for immediate delivery lost as much as 0.6 percent to $919.20 an ounce, the lowest since June 23, and traded at $919.45 an ounce at 2:29 p.m. in Singapore.

In the currency market, Yen and, to a lesser extent, dollar rise sharply today riding another round of risk aversion trades in the markets.

The Japanese yen strengthened against major currencies on Wednesday in Asia s investors sought the relative safety of the currency on concern the worldwide slump will be prolonged. The dollar fell for a third day against the yen on concern the greenback’s role as the world’s reserve currency will be questioned at a Group of Eight meeting starting today. The Japanese currencies were quoted at 94.5 against the US dollar.

The Hong Kong dollar was trading at HK$ 7.7505 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 fell almost 1 cent today after better than expected domestic economic data failed to kick-start a sluggish session depressed by offshore movements. At the local close, the Australian dollar was trading at $US0.7863, down from Tuesday's close of $US0.7960.

In Wellington trades, the New Zealand dollar drifted lower amid uncertainty about the global economic outlook and forthcoming corporate earnings in the United States. By evening the NZ dollar was buying US62.85c, down from US63.66c at 5pm yesterday. The range was US62.67c to US62.98c during the domestic session.

The South Korean won finished at 1,276.1 won to the U.S. dollar, down 3 won from Tuesday's close, as overseas investors reduced holdings of local shares.

The Taiwan dollar weakened further against the greenback. The Taiwan dollar fell against the US dollar as it was trading lower at NT$ 33.0360, down by NT$ 0.0370 from Tuesday’s close of NT$32.9890.

Coming back in equities, Asian stock markets were lower Wednesday, dragged by ongoing weakness in oil and metal prices, though the declines weren't as severe as those suffered on Wall Street.

In Japan, the stock market extended losses for sixth consecutive day, on tracking negative lead from Wall Street and weaker commodity prices, rekindled concern over the health of global economy. The market plummeted on speculation that corporate earnings are unlikely to improve amid a dearth of demand at home and abroad.

At the closing bell, the Nikkei 225 Stock Average index plummeted 227.04 points, or 2.35%, to 9,420.75, while the broader Topix index stumbled 20.59 points, or 2.3%, to 889.

On the economic front, the Cabinet Office said Japan’s machinery orders, a key leading barometer of the state of Asian demand and the region’s manufacturing sector, fell 3% in May from the previous month.

A separate Japanese report, the Ministry of Finance said the current-account surplus narrowed for a fourth month in May, adding to signs the global economy will take time to recover. The surplus shrank 34.3% from a year earlier to 1.302 trillion yen ($13.7 billion).

In Mainland China, stock index endured losses for second consecutive day, on tracking the weakness in global market on concerns over economic recovery. Banks shares dived on concern regulators will crack down on mortgage lending to cool growth in housing prices. The Shanghai Composite Index, which covers both A shares and B shares on the Shanghai Stock Exchange, tumbled 0.28%, or 8.67 points, to 3,080.77, while the Shenzhen Component Index jumped 1.02%, or 126.14 points, to 12,488.58.

In Hong Kong, the g benchmark Index extended losses for third day in row, on tracking negative cues from Shanghai bourses and Wall Street overnight. Banks and financials plummeted on concern Chinese regulators will crack down on mortgage lending to cool growth in property prices.

Properties extended losses amid worries recent gains had outpaced profit expectations. Lower crude oil and metals prices taking a toll on commodity-linked stocks, while renewed doubts over global economic recovery weighed down export-related shares.

The Hang Seng Index melted 141.20 points, or 0.79%, to 17,721.07, while the Hang Seng China Enterprise Index retracted 100.96 points, or 0.95%, to 10,573.71.

In Australia, the stock market clawed back earlier losses to finish the session flat, snapping three days of loosing streak as investors chased for bargain among recently battered shares. Banks and properties spurted after positive consumer confidence data and home loan approvals. Australian consumer confidence jumped to the highest level in 19-months in July and number of loans issued for new housing increased in May by 2.2% over April.

At the closing bell, the benchmark S&P/ASX200 index edged up 1 point, or 0.03%, to 3,767.9, meanwhile the broader All Ordinaries shrank 1.8 points, or 0.05%, to 3,766.

On the economic front, the outcome of Westpac Banking Corporation and Melbourne Institute survey statement said that the Australian consumer confidence jumped to the highest level in 19- months in July with the sentiment index rising 9.3% from June to 109.4.

The Australian Bureau of Statistics revealed that number of loans issued for new housing increased in May by 2.2% over April. The Bureau said loan approvals to build houses was up a seasonally adjusted 8.0% on month in May, approvals to purchase newly built homes were up 2.9%, and the number of approvals to purchase existing houses was up 1.5%

In New Zealand, equities inched up slightly although most of the Asian markets were trading deep in the negative terrain today trailing a dull session on the Wall Street overnight. The New Zealand benchmark index registered its second consecutive session in the green region on Wednesday. The NZX50 inched forward 0.16% or 4.35 points to 2750.60. The NZX 15 increased 0.60% or 30.23 points to close at 5098.86.

On the economic front, as per a survey conducted by business NZ, New Zealand has scored highly in a survey of international trade. Business NZ Chief Executive Phil O’Reilly says this ranking is a testament to their openness to international trade, sound institutions and services and hard work over decades to get good trade deals with other nations. Meanwhile, New Zealand’s score would be even higher if not for the barriers erected in a number of countries against agricultural exports. The NZX50 inched forward 0.16% or 4.35 points to 2750.60. The NZX 15 increased 0.60% or 30.23 points to close at 5098.86.

In South Korea, stocks finished lower as foreign investors dumped steel and financial shares amid jitters over a global economic recovery. The benchmark Korea Composite Stock Price Index (KOSPI) declined 3.18 points to 1,431.02. Foreign investors snapped a nine-day buying streak, weighing down on the market.

In Singapore, the stock market fell on tracking the weakness in global market on concerns over economic recovery. Lower crude oil and metals prices taking a toll on commodity-linked stocks, while renewed doubts over global economic recovery weighed down shares of financials and manufacturing. Properties extended losses amid worries recent gains had outpaced profit expectations. The blue chip Straits Times Index melted 12.49 points, or 0.55%, to 2,259.77

In Taiwan, stock market continued to seesaw between gains and losses, giving up its one-month high status as economic report released today showed slowing demand from Mainland China and the United States, putting pressure on export oriented sector stocks. The main Taiex share index gave up yesterday’s gains as the Taiex index de-escalated 47.08 points or 0.70%, closing the day at 6668.14

In Philippines, the stock market reversed their two days gain, closing marginally lower, tracking the losses on the Wall Street overnight. The steep overnight decline of US stocks muted the positive impact of the rate cuts hopes by the Philippine monetary officials on the local bourse, following that the inflation has slowed down to 22 years low level. The benchmark index PSEi lost 0.39% or 9.77 points to 2,461.99, while the All Shares index declined 0.25% or 4.03 points to 1,578.77.

In India, the key benchmark indices slumped in late trade after the global rating agency Standard & Poor's today, said there is risk that its sovereign credit ratings on India may be lowered. Weak global stocks also dampened investor sentiment. The BSE 30-share Sensex was down 401.30 points or 2.83% to 13,769.15. The S&P CNX Nifty was down 123.25 points or 2.93% to 4,078.90.

Elsewhere, Malaysia's Kula Lumpur Composite index went down 0.08% or 0.89 points to 1065.47 while stock markets in Indonesia were closed on the account of holiday.

In other regional market, European shares pulled back for the fifth straight session on Wednesday, with investors turning away from financial firms and oil producers as they continued to fret about the prospects for a recovery in the global economy. On a regional level, the U.K. FTSE 100 index fell 0.1% to 4,183.02, The German DAX index traded down 0.2% at 4,588.37 and the French CAC-40 index declined 0.7% to 3,028.31.