Asian markets takes turnaround on Thursday

Sensex, Hang Seng lead the regional rally while Nikkei, Shanghai follows it

Stock market in Asian region turned up on Thursday, 13 August 2009, after the Federal Reserve said the ailing US economy was showing signs of "leveling out", spurring investors to buy back shares and other riskier assets and sell US dollars.

On Wall Street, stocks registered good gains following Federal Reserve's decision to keep interest rates unchanged. Overall news flow in the market was very limited. Nine of the ten sectors ended the day in the green. Consumer staples were the only laggard. The Dow Jones Industrial Average added 120.16, or 1.3%, to 9361.61, and the S&P 500 up 11.46 points, or 1.2%, to 1005.81. The Nasdaq Composite edged up 28.99 points, or 1.5%, to 1998.72.

On the economic front, the Federal Open Market Committee didn't change the Fed's key interest rate. The committee said the economy is likely to remain weak for some time but is showing signs of leveling. As for its plans to buy up to $300 billion in long-term government securities, the committee said it will slow or extend the program but expects the full amount will be purchased by October.

In the commodity market, crude oil rose for a second day on optimism that energy demand would increase after the Federal Reserve said the U.S. recession is easing.

Crude oil for September delivery gained as much as 83 cents, or 1.2%, to $70.99 a barrel on the New York Mercantile Exchange. It was at $70.78 a barrel at 3:15 p.m. in Singapore. Yesterday the contract rose 1% to settle at $70.16 a barrel.

Brent crude oil for September settlement on London’s ICE Futures Europe Exchange rose as much as $1.01, or 1.4%, to $73.90 a barrel, and traded at $73.75 at 3:16 p.m. in Singapore. Yesterday, it gained 0.6% to close at $72.89 a barrel.

Gold gained for a second day in London as the dollar weakened, increasing the metal’s appeal as an alternative investment. Other precious metals also rose. Immediate-delivery bullion climbed $5.50, or 0.6 percent, to $952.60 an ounce at 9:12 a.m. in London. The metal traded as low as $940.25 yesterday, the lowest price this month. December gold futures added 0.2 percent to $954.50 an ounce on the New York Mercantile Exchange’s Comex division.

In the currency market, the US dollar dipped in Asian trading as investors again became more comfortable with alternatives in the wake of the FOMC statement.

The Japanese yen softened against major currencies. The Japanese yen was quoted at 95.9 per greenback, up from Wednesday’s quote of 95.25 yen.

The Hong Kong dollar was trading at HK$ 7.7509 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 jumped almost 2 cents after a sharp rise in risk appetite was sparked by a surge in global and local equity markets. At the local close, the dollar was trading at $US0.8384, up from Wednesday's close of $US0.8187. During the local session, the unit moved between $US0.8320 and $US0.8404.

In Wellington trade, the New Zealand dollar ended near where it started though trading was volatile overnight around statements by the US Federal Open Market Committee (FOMC). At its close the NZ dollar was US 67.28 cents compared to US 67.32 cents in the morning and US 66.48 cents yesterday closing.

The NZ dollar quickly fell half a cent to US 66.80 cents after the FOMC statement shortly before the local market opened. It then raced up to US 67.65 cents before settling to spend most of the day in a range between US 67.05 cents and US 67.30 cents.

The South Korean won ended at 1,237.3 won against the dollar, up 9.2 won from Wednesday's close, as offshore investors snapped up local stocks.

The Taiwan dollar strengthened against the greenback. The Taiwan dollar gained against the US dollar as it was trading higher at NT$ 32.8980, down by NT$ 0.0570 from Wednesday’s close of NT$32.950.

Coming back in equities, Asian stock markets closed mostly higher, lifted by Wall Street's gain and a benign result from the U.S. Federal Reserve's policy meeting. Commodity stocks were doing particularly well, thanks to a pick up in base metal prices.

In Japan, the shares market surged with benchmark indices heading toward 10-month high, boosted by iron & steel, non-ferrous metal, mining, and oil & coal sector after base metal and crude oil prices bounced overnight. Banks and real estate spurted after US hold interest rate at record low at zero to 0.25%. At the closing bell, the Nikkei 225 Stock Average index surged 82.19 points, or 0.79%, to 10,517.19, while the broader Topix index added 8.54 points, 0.89%, to 968.41.

On the economic front, according to data from the Ministry of Finance, overseas investors were net buyers of Japanese stocks for the fourth straight week last week, purchasing a net 292.9 billion yen worth of shares.

In Mainland China, share market bounced from five-week intraday low after entering into correction as economic growth accelerates and earning recover. Energy and materials sector led the rally after crude oil and metal prices gained overnight. Banks and financials and properties rebounded on bottom fishing after overnight gains on Wall Street on supportive comments from the US Federal Reserve.

At the closing bell, the Shanghai Composite Index, measuring A shares and B shares on the Shanghai Stock Exchange, spurted 0.89% to 3,140.56, while the CSI 300 Index, measuring exchanges in Shanghai and Shenzhen, climbed up 1.28% to 3,440.82.

In Hong Kong, the benchmark Hang Seng index surged with benchmark indices heading toward 12-month high on tracking a strong cues from Wall Street overnight after the US Federal Reserve noted signs of the recession mired US economy stabilizing, spurred investors to buy back shares unloaded during the previous day’s decline. The Hang Seng Index spurted 426.06 points, or 2.08%, to 20,861.30, while the Hang Seng China Enterprise has surged 243.83 points, or 2.09%, to 11,900.15.

In Australia, the stock market continued their strong run, adding for another session, on the back of a positive statement from the US Federal Reserve and broker upgrades on the financial sector. Top four banks continued to lead the rally, with heavyweight energy and industrial stocks also strong. At the closing bell, the benchmark S&P/ASX200 index added 92.8 points, or 2.14%, to 4,435.9, meanwhile the broader All Ordinaries raised 90.8 points, or 2.09%, to 4,436.7.

On the economic front, according to the Housing Industry Association and Commonwealth Bank, the First Home Buyer Affordability index dropped 5.1% to 152.5 points in the June quarter from March quarter.

In New Zealand, equities on the New Zealand stock market surged more than 1% following large gains on the Wall Street overnight. The share market rose more than 3100 points for the first time this month registering second consecutive day of gain in a row. The market as a whole had a sound start after stocks powered higher in the United States as the Federal Reserve said it saw signs of a more stable economy. The NZX50 increased 1.57% or 49.16 points to 3128.84. The NZX 15 ascended 1.73% or 100 points to close at 5771.18.

On the economic front, positive result for both production and new orders helped push New Zealand manufacturing activity further out of the doldrums in July, according to the BNZ capital. The seasonally adjusted PMI for July stood at 49.7. This was up 3.2 points from June, and followed an identical improvement from May to June. The last time activity was higher than July 2009 was April 2008 (50.9). A PMI reading below 50.0 indicates that manufacturing is generally declining. Business NZ Chief Executive Phil O’Reilly said that the positive results for key sub-indicators provide a much stronger base for further improvement in the sector.

Meanwhile, food prices in New Zealand moved higher by 0.6 percent in July, boosted by vegetable prices. Statistics NZ reported Thursday that higher vegetable prices were responsible for nearly the entire increase from the month before, with growing conditions hurt by cold weather. For the full year to July 2009, food prices were up 8.4 percent, with increases in all five sub-categories.

In South Korea, shares closed lower on massive last-minute sell-offs by institutional investors. The benchmark Korea Composite Stock Price Index (KOSPI) lost 0.71 points to 1,564.64, paring earlier gains.

In Singapore, the stock market climbed up after opening higher, on the back of positive finish of Wall Street overnight and firmer Asian bourses after the US Federal Reserve said the economy was stabilising. Banks and properties surged on bottom fishing. Meanwhile buying pressure was evident in manufacturing and construction shares. At the closing bell, the blue chip Straits Times Index added 42.87 points, or 1.67%, to 2,614.18.

In Taiwan, stock market sidelined the warning and worries created by Morakot Typhoon, finishing the day at two weeks high, as upbeat comment from US Fed about the recession is leveling out followed by good gains on Wall Street treated as power booster for the regional indices.

The benchmark Taiex share index spouted to two weeks high by adding 136.06 points or 1.97% in a day, closing the day at 7034.96, the highest closing since 3 August 2009.

On the economic front, Taiwan’s tax revenues came to NT$923.3 billion in the first seven months, plunging by NT$206.7 billion (US$6.26 billion) or 18.3% from that of last year, with the tax revenue for the full year estimated to be short NT$170 billion (US$5.15 billion) for a projected annual drop of above 10%.

In Philippines, the stock market closed higher scaled up by gains in the index linked counters as investors sentiments was enhanced by the gains in Wall Street overnight.

The benchmark index PSEi escalated 0.97% or 27.54 points to 2,856.06, while the All Shares index rose 0.94% or 17.02 points to 1,811.94.

In India, the key benchmark indices soared as strong industrial production in June 2009 and firm global stocks boosted sentiment. Interest rate sensitive, banking, realty, and auto stocks galloped as headline inflation remained in the negative zone for the ninth week in a row. Metal stocks valued on firm global metal prices. Oil & gas stocks rose as crude advanced. The BSE 30-share Sensex was up 498.33 points or 3.32% at 15,518.49. The S&P CNX Nifty was up 147.50 points or 3.31% to 4,605.

On the economic front, inflation based on the wholesale price index declined 1.74% in the year through 1 August 2009, after falling 1.58% in the previous week, data released by the government in early afternoon today showed. The government revised upwards inflation for the week ended 6 June 2009 to a fall of 1.01% from earlier 1.61% decline.

In sharp contrast to the gloom in the farm sector, India's industrial output expanded 7.8% in June 2009, at the fastest pace in 16 months, beating forecasts by a wide margin, data released by the government during trading hours on Wednesday showed. The strong growth in industrial production may help offset the impact of deficient rains.

Global rating agency Standard & Poor's (S&P) during trading hours today, 13 August 2009, said India's economy will continue to grow despite global downturn on the back of strong domestic demand. S&P said the potential threats to growth include revival of inflation, high interest rates and persistent global sluggishness.

India's monsoon rainfall deficit has widened further, increasing the risk of crop damage. Monsoon was 56% below normal in week to 12 August 2009 and was 72% below normal in soya bean growing central region in past one week, India Meteorological Department said on Thursday. Monsoon rains were 29% below normal during the period from 1 June 2009 to 12 August 2009. India relies on rain for 60% of its irrigation and on agriculture for 17% of its economy. The weather office chief Ajit Tyagi today told a television channel that the situation was grim and low rainfall would hurt winter-sown crops as well.

Further, foreign trade data continues to show a gloomy picture. India's imports declined by 37% in July 2009 to $18.31 billion compared to $29 billion in July 2008 while exports dropped by 26.6% to $12.53 billion compared to $17 billion in July 2008.

Elsewhere, Malaysia's Kula Lumpur Composite index went up 0.48% or 5.65 points to 1186.19 while stock markets in Indonesia’s Jakarta Composite index ended the day lower at 2396.49.

In other regional market, European shares climbed sharply, with investors buying into the mining sector in particular amid continued signs that the global economy may be past the worst. On a regional level, the U.K. FTSE 100 index rose 1.1% to 4,769.85, the German DAX index rose 1.5% to 5,428.00 and the French CAC-40 index climbed 1% to 3,541.45.