Asian markets marks manic Monday

Shanghai slump by 5.8% while Hang Seng, Sensex hovers around 4% loss

Stock market in Asian region managed a minus closing on Monday, 17 August 2009, after a further deterioration in US consumer confidence cast doubts about the pace of the global economic recovery and soured appetite for risky assets. With investors choosing to tread a cautious path and looking to cash in on recent strong gains, stocks cutting across various sectors are feeling the heat in the Asian markets. The disappointing GDP figures from Japan also weighed on the markets as well.

On Wall Street, stocks gave up ground Friday, despite a half-hearted late-day comeback, after data showed an unexpected dip in consumer confidence in August. The Dow Jones Industrial Average, which dipped more than 150 points earlier in the day, ultimately gave up 76.79 points, or 0.8%, to 9,321.40, while the S&P 500 slid 8.64 points, or 0.9%, to 1004.09. The Nasdaq Composite fell 23.83 points, or 1.2%, to 1985.52. The indices logged their first down week in five, with the Dow down 0.5%, the S&P 500 off by 0.6%, and the Nasdaq lower by 0.7% in the five-day session.

In the commodity market, crude oil fell to the lowest in more than two weeks after a report last week showed an unexpected decline in consumer confidence in the U.S. economy.

Crude oil for September delivery fell as much as $1.82, or 2.7%, to $65.69 a barrel in after-hours electronic trading on the New York Mercantile Exchange, the lowest since 31 July 2009. It was at $66.12 at 10:01 a.m. London time. The contract had plunged 4.3% on 14 August 2009 after the U.S. consumer sentiment index fell to a five-month low.

Brent crude oil for October settlement declined as much as 2.5% on London’s ICE Futures Europe exchange and was down $1.31, or 1.8%, at $70.13 a barrel at 10:02 a.m.

Gold fell to the lowest price this month in London as the dollar strengthened, curbing the metal’s appeal as an alternative investment. Immediate-delivery bullion slipped as much as $10.67, or 1.1%, to $937.88 an ounce, the lowest price since July 31. It traded at $939.60 at 9:26 a.m. in London.

In the currency market, the Japanese yen edge higher against major currencies after Japan’s economic growth missed estimates and US regulators closed five lenders, boosting demand for safe-haven assets. The Japanese yen was quoted at 94.54 per greenback as investors withdrew from riskier assets. Japan’s currency rose to 133.79 per euro.

The Hong Kong dollar was trading at HK$ 7.7506 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 dropped more than two US cents as risk averse investors sold out of the currency amid falls on local and regional equity markets. At the local close, the dollar was trading at $US0.8214, down 2.14 US cents - or 2.5 per cent - from Friday's close of $US0.8427.

The dollar started the local trading week below $US0.8300 after a poor consumer sentiment survey and weak retail sales figures in the US resulted in a fresh bout of risk aversion and a negative finish on Wall Street.

In Wellington trade, the New Zealand dollar fell today from 11-month highs set last week as investors again became more averse to risk. At the closing, the NZ dollar was at US 66.89 cents, down from US 67.87 cents at the same time on Friday. On Friday night the NZ dollar peaked at US 68.86 cents, its highest level since 29 September 2008.

The South Korean won ended at 1,256.9 won to the U.S. dollar, down 17.7 won from Friday's close as investors reduced appetites for emerging currencies on weak U.S. economic data.

The Taiwan dollar weakened against the greenback. The Taiwan dollar fell against the US dollar as it was trading lower at NT$ 32.9760, down by NT$ 0.0810 from Friday’s close of NT$32.8950.

Coming back in equities, Shanghai stocks suffering their biggest percentage drop so far this year while Hong Kong shares were also weighted down by the performance as well as a steep fall in U.S. stock futures and commodity prices.

In Japan, shares market plummeted with benchmark indices eased from 10-month high on broad based sell off as profit takers took money after weak finish of Wall Street and commodity prices. Disappointing US consumer confidence reports further fueling the decline as it aggravated doubts in the recovery's strength, overshadowing news that Japan's economy climbed out of its recession last quarter. Exporters were dragged down by the yen's strength as risk-averse investors bought the low-yielding currency in search of a perceived safe haven.

At the closing bell, the Nikkei 225 Stock Average index tumbled 328.72 points, or 3.1% to 10,268.61, meanwhile the broader Topix index dropped 23.98 points, or 2.46% to 949.59.

On the economic front, the Cabinet Office said in a statement that Gross domestic product expanded at an annual 3.7% pace in the three months ended June 30, following an 11.7% decline in the previous quarter, as a revival in exports and consumer spending helped the country climb out of its worst postwar recession

The Federation of Electric Power Companies of Japan said Japan's 10 utilities generated 10.6% less electricity in July to 84.10 billion kilowatt-hours from the same month a year earlier.

In Mainland China, grim consumer data for August dented Wall Street shares on Friday while fears that the Chinese government may move to squeeze liquidity sent China's benchmark stock index sharply lower. Lower commodity prices, persistent worries over tightening in bank loans and weak economic data dampened investor sentiment further.

At the closing bell, the Shanghai Composite Index, measuring A shares and B shares on the Shanghai Stock Exchange, plummeted 176.34 points, or 5.79%, to 2,870.63, while the CSI 300 Index, measuring exchanges in Shanghai and Shenzhen, stumbled 204.19 points, or 6.1%, to 3,140.27.

On the economic front, the commerce ministry said foreign direct investment into China slid for a 10th straight month, decreasing 36% in July 2009 from a year earlier.

In Australia, the stock market tumbled snapped five days of winning streak, dragged down by miners, materials, and energy on the back of pullback in commodity prices and weak finish of Wall Street market after US consumer confidence unexpectedly declined in August. Investors pulled out of financials following last week’s run up in the sector. The Consumer discretionary and building related stocks finished below the line on profit booking.

At the closing bell, the benchmark S&P/ASX200 index tumbled 72.6 points, or 1.63%, to 4,388.4, meanwhile the broader All Ordinaries dropped 67 points, or 1.5%, to 4,398.1.

In New Zealand, stock market commenced the first trading day of the week in the negative terrain following pessimism on the Wall Street on Friday. The share market began faltering since the early hours taking cues from other Asian markets that were trading deep in the red region. NZ benchmark index ended its three-day winning streak to end down more than 2% on Monday. The NZX50 plunged by 2.06% or 65.17 points to 3086.08. The NZX 15 declined 2.33% or 136.78 points to close at 5659.47.

On the economic front, New Zealand’s service sector showed its first sign of expansion, although at a very modest level, for the first time since March 2008, according to the BNZ Capital - Business NZ Performance of Services Index (PSI). A gauge of service sector activity edged into expansion in July for the first time since March 2008. The BNZ Capital -- Business NZ Performance of Services Index (PSI) was at 50.1 last month, 5.1 points up from June. A PSI reading above 50 indicates the sector is generally expanding. Three of the five diffusion indices that make up the PSI were still showing contraction in July.

In South Korea, stock market closed lower as investors were spooked by U.S. losses last week and bearish Chinese stocks. The benchmark Korean Composite Stock Price Index (KOSPI) slumped 44.35 points to 1,588.73

In Singapore, the stock market climbed up after opening lower, dragged down by major blue chips on the back of weak finish of Wall Street and other Asian market. Financials and properties shares tumbled on speculation the worst of the US financial crisis isn’t over after US regulators last week closed five lenders and on concerns about possible tightening of Chinese bank lending policies. At the closing bell, the blue chip Straits Times Index stumbled 85.53 points, or 3.25%, to 2,545.98.

In Taiwan, stock market in Taiwan gave up its two-week high status by starting a week on a negative note, as weak consumer data from the United States raised doubts about the strength of economic recovery, pressuring export-reliant stocks. In addition, Taiwan President Ma Ying-jeou said during an interview with a local newspaper that the signing of a FTA-like financial agreement with China known as an Economic Cooperation Financial Agreement (ECFA) probably would not take place until 2010 struck investors as bad news.

The benchmark Taiex share index started the new week by losing its two weeks high position by giving up 137.71 points or 1.95% in a day, closing the day at 6931.80, logging its worst daily percentage fall in five weeks.

On the economic front, the Financial Supervisory Commission (FSC) and the Bankers Association of Republic Of China plan to have financial institutions bear realty-loan debts of insolvent typhoon-Morakot victims whose mortgaged properties have been lost or offer a five-year grace period for principals and interests to others still with repayment capability.

In Philippines, the stock market closed lower, weighed down by the losses on Wall Street on Friday, which in turn brought the key heavy weight stocks under selling pressure. Moreover, razor sharp losses in key heavy weight stocks also dragged the composite index lower. The benchmark index PSEi plummeted 2.76% or 78.83 points to 2,771.18, while the All Shares index declined 2.37% or 43 points to 1,763.98.

In India, global sell-off after a disappointing US consumer sentiment report reigniting concerns about the global economic recovery triggered a sharp sell-off on the domestic bourses. Sustained bear hammering kept indices under pressure throughout the day. The BSE 30-share Sensex was down 626.71 points or 4.07% at 14,784.92. The S&P CNX Nifty was down 192.15 points or 4.20% to 4,387.90.

Elsewhere, Malaysia's Kula Lumpur Composite index went down 1.64% or 19.52 points to 1169.05 while stock markets in Indonesia’s Jakarta Composite index ended the day lower at 2386.86.

In other regional market, European shares fell sharply Monday as worries over bank capitalization, and weak commodity-sector performance preyed on investor confidence. On a regional level, the U.K. FTSE 100 index dropped 79.86 points or 1.7% to 4,634, the German DAX index fell 1.9% or 101.41 points to 5,186.10 and the French CAC-40 index skidded 2.1% or 73.75 points to 3,422.