Asian Markets awaits FOMC meeting

Sensex, Shanghai post modest gains while New Zealand bucks the regional trend

Stock markets in Asian region extended gains for the second day on Tuesday, 11 August 2009, as optimism about a global economic recovery. An upward revision to the Asian economic growth forecast for the year by Goldman Sachs and relief that Chinese economic recovery was on track also helped lift market sentiment.

On Wall Street, equity markets closed slightly lower as the mood on Wall Street seemed to be why not take some profits here. The Dow Jones Industrial Average was lower by 32 points, or 0.3% to 9338. The S&P 500 was down 3.4 points, or 0.3%, to 1007. The Nasdaq Composite was lower by 8 points, or 0.4%, to 1992.

In the commodity market, crude oil traded little changed above $70 a barrel in New York on speculation global demand for fuels will rebound as economies emerge from recession.

Crude oil for September delivery climbed as much as 50 cents, or 0.7 percent, to $71.10 a barrel on the New York Mercantile Exchange and traded at $71.04 at 3:08 p.m. in Singapore. Yesterday, the contract fell 33 cents, or 0.5%, to settle at $70.60.

Brent crude oil for September on London’s ICE Futures Europe exchange rose as much as 49 cents, or 0.7 percent, to $73.99 a barrel. The contract traded at $73.94 a barrel at 3:15 p.m. in Singapore.

Gold traded near the lowest this month on speculation that the dollar will continue to advance on data pointing to a recovery in the U.S. jobs market. Gold for immediate delivery traded little changed at $946.15 an ounce at 8:56 a.m. in Singapore.

In the currency market, US dollar stabilizes in Asia and retreats mildly in early European trading after another round of buying in last US session. Yen followed and extended gain following weaker industrial production data from China, which nevertheless showed 10.8% year on year gain. Nevertheless, yen crosses lost steam after hitting near term support levels.

The Japanese yen strengthened against major currencies after China also said producer prices and consumer prices both declined. The Japanese yen was quoted at 96.70 per 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 closed marginally lower after a quiet session where the currency remained within recent ranges. At the local close, the dollar was trading at $US0.8373, down from Monday's close of $US0.8389. During the day, the unit moved between $US0.8322 and $US0.8382.

In Wellington trade, the New Zealand dollar consolidated in a relatively narrow range today as analysts continued to debate investor behavior in the US dollar market.

At domestic closing, the NZ dollar was buying US67.35c, down from US67.59c at 8am and unchanged from 5pm yesterday. It traded between US67.30c and US67.70c today.

The South Korean won ended at 1,239.1 won against the dollar, down 10.9 won from Monday's close, as the greenback remained strong in markets across the world.

The Taiwan dollar weakened further against the greenback. The Taiwan dollar gave up against the US dollar as it was trading lower at NT$ 32.8480, down by NT$ 0.0300 from Monday’s close of NT$32.8180.

Coming back in equities, Asian stock markets closed mostly higher in choppy trading, with investors largely shrugging off fresh data from China while awaiting the results of the FOMC meeting in the U.S. Markets were moving in a narrow range after Wall Street pulled back slightly from the 2009 highs hit Friday.

In Japan, the Japan shares market surged toward 10-month high, boosted by insurance and banks stocks. Shares of oil & coal, nonferrous metals, and metal products companies were above the line. Construction shares gained on expectations for reconstruction efforts after the earthquake. Export related shares drifted lower as yen strengthened against major. At the closing bell, the Nikkei 225 Stock Average index rose 61.2 points, or 0.6%, to 10,585.46, while the broader Topix index put on 4.27 points, 0.4%, to 974.

On the economic front, the Bank of Japan left rates unchanged at 0.1% in a unanimous vote as widely expected and left the cautiously optimistic assessment on the economy unchanged. The bank said that Japan's economic conditions have stopped worsening, and public investment is increasing and exports and production are picking up. However, the bank also said business fixed investment is declining sharply mainly reflecting weak corporate profits. On inflation, the bank said that decline in CPI has accelerated due to fall in petroleum prices and substantial slack persisting in the economy as a whole. In other news, Japanese household confidence rose more than expected to 39.4 in July.

In Mainland China, share market snapped four days of loosing streak, after the release of July’s inflation and retail sales figures, which were largely in line with market expectations. Consumer-related companies gained after the nation’s retail sales expanded and Qingdao Haier reported higher profit. Shares of banks were higher.

At the closing bell, the Shanghai Composite Index, measuring A shares and B shares on the Shanghai Stock Exchange, rose 0.46% to 3,264.73, while the CSI 300 Index, measuring exchanges in Shanghai and Shenzhen, added 0.33% to 3,556.38.

On the economic front, the National Bureau of Statistics said China’s producer price index (PPI), a major measurement of inflation at the wholesale level, fell 8.2% year on year in July 2009. China’s consumer price index (CPI), a main gauge of inflation, dipped 1.8% in July from a year earlier. China’s power generation expanded 4.8% in July from a year earlier, the National Bureau of Statistics (NBS) said.

The NBS also said China's retail sales rose 15.2 percent in July to 993.7 billion yuan from a year earlier. Urban fixed-asset investment rose 32.9% year-on-year in the first seven months to 9.59 trillion yuan. The industrial output accelerated 10.8% in July from a year earlier, after gaining 10.7% in June.

China’s money supply, as measured by M2, expanded 28.4% in July from the same month a year earlier, according to data released Tuesday by the People’s Bank of China. The central bank also said new loans for July totaled 355.9 billion yuan ($52 billion), easing from June’s issuance of 1.53 trillion yuan, and bringing total lending growth this year to 7.7 trillion yuan, a rise of 173.2% from the first seven months of last year

China’s exports fell 23% in July from a year earlier, while imports fell 14.9%, the General Administration of Customs said on Tuesday. The trade surplus in July was $10.63 billion, compared with $8.2 billion in June.

In Hong Kong, the benchmark Hang Seng Index surged, after opening lower, ignoring a weak finish on Wall Street and a decline in base metal prices. Shares of China Construction Bank and Hong Kong Exchanges & Clearing led the rally. Gains were further supported by China July’s inflation and retail sales figures, which were largely in line with market expectations. The Hang Seng Index advanced 144.69 points, or 0.69 %, to 21,074.21, while the Hang Seng China Enterprise has bounced 87.14 points, or 0.73%, to 11,988.79.

In Australia, the stock market shrugged off a negative lead from Wall Street to end the session at a 2009 high, boosted by strong performance from banks stocks outweighing falls from the miners. Meanwhile, buying pressure was evident in industrials, consumer Discretionary, and properties.

At the closing bell, the benchmark S&P/ASX200 index rose 27.9 points, or 0.65%, to 4,332.0, meanwhile the broader All Ordinaries advanced 25.2 points, or 0.58%, to 4,334.40.

On the economic front, National Australia Bank Monthly Business Survey for July 2009 indicated Business confidence in Australia rose to nearly a two-year high in July. Business confidence index advanced by 6.0 points from June to hit 10.0 Points. But business conditions index, which measures current business conditions, was up 3.0 points to an index reading of 1.0.

In other figures from the survey, NAB expects some softening ahead but has lifted its GDP forecast for Australia in 2009 to 0%, from 0.5% contraction. NAB has also forecast peak unemployment of 7.3% in 2010 from July 2009 rate of 5.8%.

In New Zealand, equities ended lower on Tuesday after registering two consecutive gains. The New Zealand share market slipped in early trading, after a pull back in major stock indices in the United States. The NZX50 fell by 0.83% or 25.50 points to 3055.47. The NZX 15 decreased 1.09% or 60.71 points to close at 5595.31.

In South Korea, shares closed up 0.2% as foreign investors extended their buying streak, bolstered by upbeat economic signals from the central bank. After trading in a tight-range, the benchmark Korea Composite Stock Price Index (KOSPI) edged up 3.1 points to 1,579.21.

In Singapore, the stock market surged on broad based buying across the board after Singapore revised its economic growth slightly higher for the second quarter. Banks and properties led the rally. Meanwhile buying pressure was evident in manufacturing, multi industries, and construction shares. The blue chip Straits Times Index bounced 47.95 points, or 1.88%, to 2,597.30.

On the economic front, the Ministry of Trade and Industry said GDP grew a seasonally adjusted 20.7% sequentially in the second quarter, reversing a 12.2% contraction in the first quarter. Manufacturing surged 49.5%, construction jumped 32.7%, and financial services rose 22.8% from the previous quarter, the ministry said.

The growth was largely due to a surge in production in pharmaceutical ingredients, leading to an overall jump in biomedical output. Financial services was boosted by sentiment-sensitive segments such as stock market activities

Singapore said it was comfortable with its monetary policy stance of zero appreciation for the Singapore dollar, warning better-than-expected second quarter growth may not be sustained. Singapore maintained its 2009 forecast for the economy to contract by 4 to 6% and said a subdued recovery was likely to continue in 2010, after the trade dependent city-state leapt out of recession in the second quarter.

In Taiwan, stock market advanced for the second straight session, as falloff in financial stocks was compensated by the upsurge in the technology shares. However, the advance of limited as government started counting the impact of the typhoon Morakot. The Council of Agriculture (COA) is coordinating with food suppliers to import vegetables in emergency in order to fill the shortfall caused by the heavy loss of agricultural products inflicted by typhoon Morakot. The main Taiex share index added 26.15 points or 0.38%, closing the day at 6909.02.

On the economic front, Taiwan’s export value hit a nine-month high of US$17.27 billion in July, up US$330 million or 1.9% from a month earlier.

According to the statistics released by the Ministry of Finance (MOF), the July export value presented a double-digit fall of 24.4% from a year earlier, yet for the lowest drop of its kind in eight months. This, in turn, bodes a rebound in the island’s economy.

Huang Chih-peng, director general of the Bureau of Foreign Trade (BOFT), analyzed that the improvement in export value in July might last through the following months and the negative growth is very likely to fall under 20% in August and drop further to below 10% in September.

In July Taiwan’s top 10 export items witnessed remarkable improvement in export value. Among them, chemical products saw export value hit a 10-month high with negative annual growth narrowing to 15.9% from the corresponding 53.1% recorded in January this year. Besides, electronic items, plastic & rubber products, and optical apparatuses all saw their exports hit a nine-month high.

In the same month Taiwan’s imports inched up by US$60 million to US$15.24 billion, also a nine-month high and edging up 0.4% from June; and the trade surplus for the month stood at US$2.03 billion. The top five import items were minerals (including crude oil), electronics, chemicals, basic metal & related products, and machinery. Among them, minerals posted a monthly rise of US$570 million in import value.

In Philippines, the equities ended marginally higher amid a nervous trading session in Asia today as the familiar sense of anxiety ahead of the US Fed meet filled in the sentiments in the global marketplace. At the final bell, the benchmark index escalated 0.34% or 9.96 points to 2,860.54, while the All Shares index climbed 0.32% or 5.82 points to 1,813.28.

In India, volatility ruled the roost as the market did a total reversal after surging to a fresh intraday high in mid-afternoon trade. The BSE 30-share Sensex was up 64.82 points or 0.43% at 15,074.59. The S&P CNX Nifty was up 0.76% or 33.70 points to 4,471.35.

Elsewhere, Malaysia's Kula Lumpur Composite index went down 0.14% or 1.72 points to 1186.28 while stock markets in Indonesia’s Jakarta Composite index ended the day higher at 2399.28.

In other regional market, European shares edged lower on Tuesday, down for the second time in four sessions, with miners and oil producers some of the strongest performers in early action. On a regional level in Europe, the U.K. FTSE 100 index fell 0.13% to 4,716; the German DAX index gave up 0.25% or 13.71 points at 5,405 and the French CAC-40 index gained 0.13% or 4.42 points at 3,509.