Asian markets turned timid on Thursday

Shanghai, Sensex fell while Nikkei, Hang Seng turned higher

Stock market in Asian region turned timid on Thursday, 6 August 2009, with a weak set of economic reports from the U.S. hurting sentiment to an extent. While some of the markets in the region given up most of their gains, most markets recorded some impressive gains on rising optimism about a global economic revival.

On Wall Street, the weak economic data dragged on indices most of the day as traders eyed a profit-taking opportunity, but stocks were off their worst levels of the session at the close. The Dow Jones Industrial Average fell 39.22 points, or 0.4%, to 9280.97, while the S&P 500 was off 2.93 points, or 0.3%, at 1002.72. The Nasdaq Composite edged down 18.26 points, or 0.9%, to 1993.05.

In the commodity market, crude oil was little changed in New York amid rising equity indexes and concerns about excess availability of crude.

Crude oil in New York advanced earlier today to its highest since June 30, and Brent crude in London increased to its highest this year as stock markets in Europe and Asia rose on better-than- expected earnings. The U.S. Energy Department reported that crude stockpiles grew more than expected last week as refinery utilization fell to its lowest in more than two months.

Crude oil for September delivery rose as much as 45 cents, or 0.6 percent, to $72.42 a barrel on the New York Mercantile Exchange, and traded at $72.08 at 9:37 a.m. London time. Prices have gained 61 percent this year.

Brent crude oil for September settlement rose as much as 49 cents, or 0.7 percent, to $76 a barrel on London’s ICE Futures Europe Exchange. That’s the highest since Oct. 14, 2008. The contract traded for $75.61 at 9:37 a.m. local time.

Gold advanced as a falling dollar and weak U.S. economic data bolstered the precious metal’s appeal as a haven investment. Gold for immediate delivery gained 0.1 percent to $964.40 an ounce at 9:41 a.m. in Singapore. It reached $970.47 on Aug. 4, the highest since June 5.

In the currency market, the US dollar gained against the major currencies as weaker economic data from the US lowered risk appetite amid expectations from the European Central Bank and Bank of England rate decisions due today.

The Japanese yen weakened against the euro and the dollar on Thursday, 6 August 2009 as stocks advanced after Japanese companies reported improved earnings, reviving demand for higher-yielding assets. The Japanese yen was quoted at 95.14 against the US dollar, down from Wednesday’s quote of 94.97 yen.

The Hong Kong dollar was trading at HK$ 7.7500 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 held fast above 84 US cents after the jobs report for July showed a surprise jump in employment, fuelling speculation local interest rates may rise even before December. The dollar bounced to a high of $US0.8462 after data showed employment rose by 32,200 in July, confounding expectations for a drop of 20,000. Unemployment was steady at 5.8 per cent.

The Aussie pulled back by early evening to close at $US0.8429, but was still up from $US0.8404 seen here at yesterday's close. It was up on the yen at 80.20, from Wednesday's 79.86.

In Wellington trade, the New Zealand dollar held around 10-month highs against the greenback, reached on the back of strong rises in milk powder prices at Fonterra's monthly internet auction yesterday morning. The kiwi stayed above US 67 centsbb after the surge, getting to a high around US 67.60 cents shortly before midnight. After a bumpy session early today, the NZ dollar was buying US 67.39 cents by 8am.

The South Korean won ended at 1,222.5 won against the greenback, up 1.8 won from Wednesday's close, as foreign investors increased their holdings in local stocks.

The Taiwan dollar strengthened strongly against the greenback. The Taiwan dollar added against the US dollar as it was trading higher at NT$ 32.7920, up by NT$ 0.0720 from Wednesday’s close of NT$32.720.

Coming back in equities, Asian shares ended mostly higher, though Chinese stocks tumbled on persistent worries Beijing may tighten monetary policy to prevent asset bubbles.

In Japan, the shares market bounced as bargain hunters stepped in following yesterday’s slump. Shares of commodities companies gained on higher metal prices. Automakers bounced on bottom fishing on hopes a car manufacturers will expand market share. Gains were also driven by positive earnings reports. Soften yen against the euro and the dollar boosted up exporter shares. At the closing bell, the Nikkei 225 Stock Average index surged 1.32%, or 135.56 points, to 10,388.09, while the broader Topix index added 7.93 points, 0.8%, to 957.51.

On the economic front, Japan's leading index increased to 79.8 in June from 76.9 in the preceding month, a preliminary report by the Cabinet Office said Thursday. The leading index has now increased for the fourth consecutive month in June. The coincident index climbed to 87.8 from 87.1 in May. This is the third consecutive month the index has risen.

In Mainland China, share market tumbled dragged down by major heavyweights on concern that the central bank comment about fine-tuning its policy heralds a curbing of liquidity into the market, but property shares rebounded to lift the index off the lows.

Financials tumbled amid fears that central banks might be introduced tightening measures to cool the market. Properties plunged on report the southern city may start trials for a property tax. Materials stocks dived amid worries about companies’ valuation. Shares of coal, steel, and oil sectors dived after major index closes at fresh 14-month high Tuesday. Investors were cautious about companies valuations after the market surged fourteen month high. Shanghai shares have moved ahead of fundamentals and the whole market is facing increasing risks, as valuations are getting more expensive.

At the closing bell, the Shanghai Composite Index, measuring A shares and B shares on the Shanghai Stock Exchange, dropped 2.11%, or 72.17 points, to 3,356.33, while the CSI 300 Index, measuring exchanges in Shanghai and Shenzhen, dived 2.08% to 3,663.12.

In Hong Kong, the benchmark index surged after opening lower, ignoring a weak finish on Wall Street and a sharp decline in Shanghai. Shares of market heavyweight HSBC Holdings led the rally on an improved outlook after its first-half results earlier in the week. Gains were further extended in the afternoon, helped by rotational buying in new energy stocks and bargain hunting in properties. The Hang Seng Index surged 404.47 points, or 1.97%, to 20,899.24, while the Hang Seng China Enterprise has climbed up 84.12 points, or 0.70%, to 12,052.60.

In Australia, the stock market surged as better than expected corporate earning and strong jobs report boosting confidence the global economy is recovering. Banking stocks continuing climbs that started last week after analyst upgrades. Materials and resources benefited from a rise in metal prices. The property trusts enjoyed a stronger day too as money continued to flow into the sector that was previously held in cash by many institutions. At the closing bell, the benchmark S&P/ASX200 index surged 61.8 points, or 1.45%, to 4,326.3, meanwhile the broader All Ordinaries rose 58.8 points, or 1.38%, to 4,331.

On the economic front, the Australian Bureau of Statistics data showed that Australia’s unemployment rate held steady at 5.8% in July, seasonally adjusted.

In New Zealand, equities ended lower for the second day in a row. The NZX50 decreased by 0.91% or 27.92 points to 3056.14. The NZX 15 declined 1.17% or 66.08 points to close at 5627.78.

On the economic front, NZ unemployment hit 6% in the June quarter, up from 5% in March and much worse than most expected, as the recession knocked out thousands more jobs. During the June 2009 quarter, the number of people unemployed went up by 20.6% to reach 138,000.

In South Korea, stocks closed higher as investors scooped up financial shares on better-than-expected second-quarter earnings. The benchmark Korea Composite Stock Price Index (KOSPI) climbed 5.57 points to 1,565.04, recovering from the previous session's fall.

In Singapore, the stock market finished the volatile session lower amid bout of short covering and profit booking. Shares of major blue chip above the line as bargain hunters steeped in following yesterday selloff. Banks extended yesterday losses amid renewed jitters about credit tightening on the China. Properties, Manufacturing, transportation, and multi-industries shares bounced on bottom fishing. The blue chip Straits Times Index slid 5.33 points, or 0.2%, to 2,601.50.

In Taiwan, stock market posted its first advance in the month of August by closing higher, as financial stocks supported the gains with advance. The main Taiex share index rose 20.41 points or 0.30%, closing the day at 6868.65.

In Philippines, the stock market overturned yesterday's gains, closing more than 1% lower following weak global cues and lack of support from the easing inflationary pressures on the domestic front. At the final bell, the benchmark index PSEi lost 1.58% or 45.75 points to 2,841.21, while the All Shares index fell 20.98 points or 1.15% to 1,799.29.

In India, the key benchmark indices nose-dived in last one hour or so of trade led by fall in auto, metal, realty and FMCG stocks. The BSE 30-share Sensex went down 389.80 points or 2.45% to 15514.03 off close to 460 points from the day's high. The S&P CNX Nifty was down 108.65 points or 2.31% to 4,585.50.

Elsewhere, Malaysia's Kula Lumpur Composite index went up 0.38% or 4.48 points to 1183.97 while stock markets in Indonesia’s Jakarta Composite index ended the day lower at 2359.98.

In other regional market, Europe stocks returned to winning ways after a one-day hiatus as investors continued to return to financials reporting results. The U.K. FTSE 100 rose 0.9% to 4,688.10 and the German DAX added 1% to 5,406.33

Looking ahead for the day, the important news to note would be the much awaited rate decision by the European Central Bank and the Bank of England which are expected to keep rates unchanged at 1% and 0.5% respectively although the conference following the decision would hold the key as the central bank governors would make statements on the economic outlook and any further stimulus packages if any. From the US, the initial jobless claims would be the most important as higher job loss reading could lead to dollar strengthening as investors resort to risk aversion.