Asian markets celebrates healthy economic reports

Nikkei trespassed 10,500 mark while Hang Seng nears 21,000 mark

Stock markets in Asian region finished mostly higher on Monday, 10 August 2009, as Nikkei trespassed the 10,500 mark for the first time in ten months, buoyed by a strong close on Wall Street Friday after a U.S. jobs report underpinned hopes the world's largest economy was on track for recovery. Additionally, an unexpected surge in Japan's core machinery orders in June, a closely watched indicator of corporate capital spending also boosted investor sentiment.

On Wall Street, stocks ended with good gains for the week that ended on Friday. The gains were led by healthy economic reports, mainly in the housing and employment sectors. There were also a large number of earnings reports, and most of them beat expectations. The Dow Jones Industrial Average ended higher by 113.8 points at 9,370.07. The Nasdaq Composite Index, ended higher by 27.09 points at 2,000.25. S&P 500 ended higher by 13.4 points at 1,010.48.

On the economic front, the Labor Department reported that the unemployment rate, in July 2009 unexpectedly fell to 9.4% as nearly a half a million people dropped out of the labor market. U.S. non-farm payrolls declined by 247,000 to 131.5 million in July, the 19th consecutive month of job losses. It was the fewest lost payroll jobs since last August 2008.

But the number of people who've been out of work longer than six months soared by a record 584,000 to 5 million, accounting for more than a third of all unemployment for the first time on record.

In the commodity market, crude oil fell for a third day in New York after gasoline futures declined on signs of slowing seasonal demand for auto fuel late in the U.S. summer.

Crude oil for September delivery fell as much as 71 cents, or 1%, to $70.22 a barrel in after-hours electronic trading on the New York Mercantile Exchange, and traded at $70.39 at 2:18 p.m. in Singapore.

Brent crude oil for September settlement declined as much as 43 cents, or 0.6%, to $73.16 a barrel on London’s ICE Futures Europe exchange, and was at $73.23 at 2:18 p.m. Singapore time.

Gold declined after an unexpected drop in U.S. unemployment drove the dollar higher, eroding the appeal of the precious metal as an alternative investment. Gold for immediate delivery lost 0.3% to $952.20 an ounce at 8:28 a.m. in Singapore, dropping for a fourth day.

In the currency market, the US dollar retreats mildly as the week starts to digest Friday's sharp gain. But after all, downside is limited so far as the greenback is supported by mild weakness in commodities with crude oil hovering around 70 level while gold stays sold below 960. Asian stocks are broadly higher following strength in US but provide little inspiration to currency markets so far.

The dollar slipped against the yen in Asian trading Monday, after Japanese government data showed core machinery orders jumped more than forecast, as did the nation's current-account surplus. The Japanese yen was quoted at 97.28 against the US dollar, up from Friday’s quote of 95.38-39 yen.

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 was flat after a better than expected US jobs report had traders buying American dollars in anticipation that the US Federal Reserve might be prepared to raise interest rates sooner than expected. At the local close, the dollar was trading at $US0.8389, up a touch from Friday's close of $US0.8388. During Monday's local session, the local unit moved between $US0.8336 and $US0.8404.

In Wellington trade, the New Zealand dollar rose today after bouncing around during the weekend reflecting movements in the US dollar. The NZ dollar was US67.35c at 5pm, up from US66.99c at 8am. The NZ dollar spiked to a fresh 10 month high of US68c on Friday night but then was knocked back toward US67c as the US dollar strengthened against all the major currencies. It was US67.07c at 5pm on Friday.

The South Korean won ended at 1,228.2 won against the dollar, down 3.2 won from Friday's close, as the greenback remained strong in markets across the world.

The Taiwan dollar weakened against the greenback. The Taiwan dollar added against the US dollar as it was trading lower at NT$ 32.8250, down by NT$ 0.0330 from Thursday’s close of NT$32.7920.

Coming back in equities, a weaker yen and robust economic data boosted Japanese stocks Monday, while mainland Chinese markets fell for a fourth straight session on continued speculation that Beijing will impose restrictions on property transactions.

In Japan, the shares market ended higher, as positive sentiment flowed through from Friday’s stronger-than-expected US employment numbers and better-than-expected Japanese core machinery orders. Consumer and automotive companies lead the rally, boosted by increased Japanese machine orders. Export related shares benefited from weakening of the yen. Shares of iron & steel, nonferrous metals and mining companies bounced as base metal prices surged. Banks and properties rose on tacking US peer.

At the closing bell, the Nikkei 225 Stock Average index climbed up 112.17 points, or 1.08%, to 10,524.26, while the broader Topix index put on 12.48 points, 1.3%, to 969.24.

On the economic front, a data from the Cabinet Office showed that Japanese machinery orders climbed 9.7% in June, the first time in four months. The nation’s current-account surplus more than doubled from a year earlier to 1.15 trillion yen ($11.8 billion) in June, the Ministry of Finance said.

In Mainland China, share market tumbled enduring losses for fourth consecutive day, dragged down by major banks and properties amid investors’ caution over possible changes on the monetary policy after last week central bank comment about fine-tuning its policy heralds a curbing of liquidity into the market. At the closing bell, the Shanghai Composite Index, measuring A shares and B shares on the Shanghai Stock Exchange, dropped 0.34% or 10.93 points to 3,249.76, while the CSI 300 Index, measuring exchanges in Shanghai and Shenzhen, dived 0.3% or 10.56 points to 3,544.54.

On the economic front, the National Development and Reform Commission said in a report that House prices in 70 major cities in China climbed 1% in July from the prior year, while it gaind 0.9% from June 2009.

In Hong Kong, the benchmark index surged on tracking a strong finish on Wall Street and strong rally in HSBC and China mobile lifted by persistent hopes of a listing in Shanghai. Financials and properties rebounded as bargain hunters stepped in after comments from Chinese Premier Wen Jiabao soothed worries the mainland authorities would take measures to rein in liquidity. Materials stocks rebounded after copper prices climbed amid optimism that the global recession may be easing.

The Hang Seng Index advanced 554.15 points, or 2.72%, to 20,929.52, while the Hang Seng China Enterprise has bounced 289.47 points, or 2.49%, to 11,901.65.

In Australia, the stock market managed to stay above line amid profit booking in the afternoon trading session after opening higher inspired by higher base metal prices and strong lead from Wall Street. Property trusts, consumer staples, healthcare, and telecommunications stocks finished higher. At the closing bell, the benchmark S&P/ASX200 index added 4.7 points, or 0.11%, to 4,304.1, meanwhile the broader All Ordinaries put on 6.1 points, or 0.14%, to 4,309.2.

In New Zealand, equities on the New Zealand stock market started the week firmly. The NZX50 rose by 0.48% or 11.98 points to 3080.97. The NZX 15 ended flat at 5656.03.

On the economic front, the New Zealand Manufacturers and Exporters Association called for the Reserve Bank to lower the OCR immediately to alleviate the strain of the NZ dollar's strength on exporters. However, economists at Westpac issued a warning against calls for the Reserve Bank to lower the official cash rate (OCR) in a bid to weaken the New Zealand dollar.

In South Korea, shares remained virtually unchanged as investor sell-offs outweighed the market's earlier gains. The benchmark Korea Composite Stock Price Index (KOSPI) gained 0.11 points or 0.01 percent to 1,576.11.

In Taiwan, stock market in Taiwan demoted the ‘Morakot’ typhoon that slammed in to Taiwan on Thursday night by starting the week on positive note, as cement and construction sector shares jumped after a typhoon hit the island resulting into the rising demand for reconstruction work. Taiwan's stock market was closed on Friday because of a typhoon over the weekend.

The main Taiex share index rose 14.22 points or 0.21%, closing the day at 6882.87, starting the week on a positive note despite of havoc caused by ‘Morakot’ a typhoon that slammed into Taiwan overnight, leaving at least six people dead or missing and more than a dozen injured, officials and media reported Saturday.

On the economic front, Taiwan’s consumer price index (CPI) dropped an annual 2.33% in July, the largest fall since November 1970 or in 39 years. Likewise, the wholesale price index (WPI) dipped a record 14.11%.

According to the Cabinet-level Directorate General of Budget, Accounting and Statistics (DGBAS), in the same month the core CPI, excluding prices of fresh vegetables, fruits and fish as well as energy, dropped the second consecutive monthly 0.93%, the largest of its kind since July 2003. Insiders say the sharp declines in CPI and WPI might fuel deflation on the island.

The July CPI stood at 104.28, edging up 0.19% from a month earlier and a new high in six months. However, the figure is still lower than the 106-plus figure recorded from July to November of last year, due to the high international oil prices.

The July WPI posted at 102.21 for a monthly rise of 1.05%, a new high in eight months. Compared to the same month of last year, WPI of products sold domestically and locally made products for Taiwan dived 16.26% and 16.58%, respectively, both were the largest drops of their kinds.

Influenced by economic downturn, the turnover posted by F&B outlets (dining-out expenditures) saw an annual growth of negative 0.2% in July, the first fall since June 2004.

In the first seven months of this year the CPI dipped an annual 0.71%. Polaris Research Institute, a prestigious private think tank here, predicted in June that Taiwan’s CPI might drop an annual 0.96% in the fourth quarter of the year, but reversed the prediction early this month, saying the CPI growth is very likely to turn positive for the quarter.

In other economic news, Taiwan’s foreign exchange reserves increased by US$3.53 billion from a month earlier to a record high of US$321.094 billion in July, remaining the world’s fourth largest, next to China, Japan, and Russia, according to the central bank here.

The central bank attributed the ballooning forex reserves to the continuing inflow of foreign funds. As of the end of July the cumulative net inflow of foreign funds reached US$136.803 billion, a new high this year; and in July alone the net inflow was US$2.392 billion or about NT$80 billion for the fifth consecutive monthly net inflow.

However, among the four Little Dragons in Asia, Taiwan saw the smallest monthly increase of US$3.53 billion in forex reserves in July; while the corresponding figures for Hong Kong was US$9.5 billion, South Korea US$5.8 billion, and Singapore US$4.7 billion.

As of the end of June China witnessed its forex reserves stand at US$2.13 trillion for a sharp quarterly rise of US$177.9 billion, leading the world. Japan took the second place with US$988.5 billion, down by US$4 billion from a month earlier; and Russia the third with US$365.4 billion for a sharp monthly rise of US$11.6 billion.

In Philippines, the stock market closed higher, as investor’s sentiments were supported by gains on the Wall Street overnight, which in turn led to the buying of key heavyweight stocks. Moreover, weighty gains in the key heavyweight stocks also assisted the composite index to scale up, especially the mining & oil index. Mining & oil index escalated more than 7%. At the concluding bell, the benchmark index PSEi ascended 2.42% or 67.60 points to 2,850.58, while the All Shares index rose 2.05% or 36.34 points to 1,807.46.

On the economic front, domestic liquidity or M3 continued to post double-digit growth in June 2009, albeit at a slower rate of 12.6% year-on-year compared to 15.0% in the previous month. On a monthly basis, seasonally adjusted M3 growth decelerated to 0.3 percent in June from 1.1 percent (revised) in May. The expansion in net foreign assets (NFA) continued to drive the growth of liquidity, even as it was lower at 17.6% from 19.8% in May.

Growth in commercial banks’ outstanding loans including reverse repurchase agreements (RRPs) continued to be in the double-digits at 11.1% year-on-year in June from 10.2% in May, to reach P2.2 trillion at end-June. Preliminary data showed that loans for production activities expanded year-on-year by 14.4% in June, lower than the 17.1% growth reported in the previous month.

In India, the key benchmark indices extended losses for the third straight day on weak European cues stocks. Fears of scanty rains also weighed on the sentiment. Sensex fell below the psychological 15,000 mark. The market pared gains after a firm starts triggered by better than expected US and Japanese economic data. It lost further ground later, slipping into the red from green as below normal monsoon rains and spread of the deadly swine flu in the country weighed on the sentiment.

The Sensex fell below the psychological 15,000 mark, however soon regained that psychological level as the market cut losses in early afternoon trade. The market moved into the green from red in early afternoon trade. The market moved between positive and negative zone in mid-afternoon trade.

Finally, the BSE 30-share Sensex finished the day 150.47 points or 1% at 15,009.77. The Sensex rose 257.10 points at the day's high of 15,417.34 in early trade. The S&P CNX Nifty fell 43.75 points or 0.98% to 4,437.65.

Elsewhere, Malaysia's Kula Lumpur Composite index went up 0.26% or 3.12 points to 1188 while stock markets in Indonesia’s Jakarta Composite index ended the day lower at 2389.56.

In other regional market, European shares declined for the first time in three sessions on Monday, with German auto giants Daimler and Volkswagen dragging after downgrades at separate brokerage firms. On Monday, the DAX declined 0.8% or 43.53 points to 5,416, the French CAC-40 index lost 0.63% or 22.34 points to 3,499 and the U.K. FTSE 100 index lost 0.63% or 29.69 points to 4,702.

Looking ahead for the day, the economic calendar is light today as Euro zone Sentix investor confidence is set release, which is expected to show some improvement.