Shanghai led the regional pull down while Sensex, Sydney, Seoul follows

Stock market in Asian region pulled down by plunge in Chinese stocks on Monday, 31 August 2009, as Chinese stocks tumbled 5% to a three-month low, weighing on Asian stocks and sapping investor willingness to put money at risk. Volatility in Shanghai curbed risk-taking attitude in investors searching for bigger returns.

On Wall Street, stocks finished Friday's session mixed, as technology shares rose on Intel's rosy outlook while blue chips faltered. After advancing as many as 31 points to start the day, the Nasdaq Composite turned negative at midday before ultimately finishing higher. The tech-heavy index tacked on 1.04 points, or 0.05% to 2028.77. Meanwhile, the Dow Jones Industrial Average finished lower, losing 36.43 points, or 0.38%, at 9544.20, halting its win streak at eight sessions. The S&P 500 dipped 2.05 points, or 0.2%, to 1028.93.

In the commodity market, crude oil fell for the first time in three days in New York as concern over above-average distillate fuel stockpiles capped a rally built on speculation that demand will increase as the global economy recovers.

Crude oil for October delivery fell as much as $1.19, or 1.6 percent, to $71.55 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It traded at $71.60 at 9:20 a.m. in London, having earlier gained as much as 62 cents, or 0.9%.

Brent crude for October fell as much as $1.45, or 2%, to $71.34 a barrel on the London-based ICE Futures Europe exchange and traded at $71.42 at 9:24 London time.

Gold rose for a fifth day, the longest run of increases in more than a month, as the dollar weakened on signs a recovery in global economies may be accelerating. Gold for immediate delivery rose as much as 0.6% to $960.75 an ounce and last traded at $955.61 at 1:46 p.m. in Singapore

In the currency market, Japanese yen surges as the week start following broad based weakness in Asian equity markets. Opposition party DPJ won the Japanese national election by getting 308 of 480 lower-house seats. Yen crosses are broadly lower resuming recent fall. The US dollar got a lift but the strength is limited. The Japanese yen was quoted at 92.77 per greenback, down from Friday’s quote of 93.60 yen.

The Hong Kong dollar was trading at HK$ 7.7508 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 fell on Monday as a weaker equity market in China lowered demand for high-yielding currencies. At the local close, the Australian dollar was trading at $US0.8370, down 0.4% from Friday's close of $US0.8407. During local session, the local unit moved between $US0.8369 and $US0.8443.

In Wellington trade, the New Zealand dollar ended lower today even though the National Bank Business Outlook survey showed a big jump in business confidence. It was at US68.25c at 5pm from US68.43c at 8am and US68.65c at 5pm on Friday.

The South Korea won ended at 1,248.9 won to the U.S. dollar, down 4.5 won from Friday's close, as foreign investors reduced their holdings of local shares.

The Taiwan dollar strengthened against the greenback. The Taiwan dollar was trading higher against the US dollar as it closed trading at NT$ 32.9230, 0.0020 higher from Friday’s close of NT$32.9250.

Coming back in equities, Japanese stocks gave up an early rally to turn negative Monday, in the first trading session after Japanese voters handed the opposition Democratic Party of Japan a landslide victory over the long-ruling Liberal Democratic Party.

In Japan, shares market slipped after hitting an 11-month intraday high after an election win by the opposition party. The DPJ won 308 seats, a vast majority of the 480 seats in the lower house of parliament, compared with 115 seats previously. The LDP’s representation fell to 119 seats from 300, and the LDP's coalition partner New Komeito’s seats fell to 21 from 31.

At the closing bell, the Nikkei 225 Stock Average index tumbled 41.61 points, or 0.4% from Friday to 10,492.53; meanwhile the broader Topix index shed 3.58 points, or 0.37%, to 965.73.

On the economic front, the Ministry of Economy, Trade and Industry said Monday Japan’s factory output rose for the fifth straight month in July as manufacturers gained confidence in the country’s nascent recovery. Industrial production climbed 1.9% in July 2009 from the previous month. Manufacturers expect factory output to continue climbing in the months ahead, the ministry said. It predicts industrial production to rise 2.4% in August and 3.2% in September.

The Trade Ministry also said Japan’s retail sales fell for an 11th month in July, slid 2.5% from a year earlier, as poor weather and a worsening job market kept shoppers at home.

The Ministry of Health, Labor and Welfare said that total cash earnings of wage earners in Japan dropped 4.8% in July, year-on-year, slower than a revised 7% drop in the preceding month. The Natural Resources and Energy Agency said Japanese crude oil imports fell 18.1% in July from a year earlier to 109.45 million barrels.

In Mainland China, share market extending last week plunge as investors unload stocks across the board on continued concerns over supply, outlook for credit growth, and economy. Market participant sentiments turned fragile amid worries about market liquidity as many more companies still to conduct fund-raising moves in market and a talk of slowdown in new lending growth in August 2009. Investors sold stocks on concerns that banks will cut back on the lavish lending that helped push shares higher earlier in the year. At the closing bell, the Shanghai Composite Index, measuring A shares and B shares on the Shanghai Stock Exchange, dropped 192.94 points, or 6.74% to 2,667.75.

In Hong Kong, benchmark index succumbed with steep losses across the sector on tracking Shanghai’s market that was hit with another bout of heavy selling amid worries about liquidity in the market drying up, sapped investor willingness to put money at risk. Market participant sentiments turned fragile on continued concerns over shares supply, outlook for credit growth, and economy. The Hang Seng Index dropped 374.43 points, or 1.86%, to 19,724.19, while the Hang Seng China Enterprise dived 155.72 points, or 1.3, to 11,278.26.

In Australia, the stocks dropped after spending the session oscillating in and out of positive territory, dragged down by the big miners and as weak lead from offshore market and in anticipation of the Reserve Bank of Australia interest rate decision this week. At the closing bell, the benchmark S&P/ASX200 index has lost 10.5 points, or 0.23%, to 4,479.1, meanwhile the broader All Ordinaries slipped 11.8 points, or 0.26%, to 4,484.19.

On the economic front, the Reserve Bank of Australia said in a report that total credit provided to the private sector in Australia was up 0.2% in July 2009, after an increase of 0.1% previous month. On an annual basis, private sector credit climbed 3% after the 3.4% increase in June.

Housing credit increased 0.6% in July, following an increase of 0.6% in June. On year, housing credit rose 7.3%. Personal credit declined 0.2% in July, following a fall of 0.3% in June. On year, personal credit fell 6.4%. Business credit declined 0.3% in July, following a fall of 0.6% over June. On year, business credit declined 0.7%.

The Housing Industry Association said that new home sales increased a disappointing 0.1% in July. The figure increased 0.5% the previous month. The Australian Bureau of Statistics said inventories in Australia were down a seasonally adjusted 3.4% in the second quarter of 2009 compared to the first quarter ended March 2009.

In New Zealand, stock market commenced the first trading day of the week in the negative terrain after ending positive on Friday. The share market trailed the US stocks that ended dull on Friday. The NZX50 fell 0.37% or 11.33 points to 3098.00. The NZX 15 decreased 1.06% or 59.85 points to close at 5669.69.

On the economic front, according to Reserve Bank governor Alan Bollard, the NZ economy is now recovering but the structure of that recovery will be important. He also said that the global economy was also at a turning point and would have a fragile recovery. However, as per the RBNZ chief, the New Zealand economy is recovering, and for us really, it's not just the size of the recovery, it's the quality we'll be concerned about.

In South Korea, stocks closed lower as recent falls in the Chinese market provoked worries about a possible correction The benchmark Korea Composite Stock Price Index (KOSPI) declined 16.09 points to end at 1,591.85.

In Singapore, the stock market dropped on broad based sell off across the sector, on tracking weak cues from Shanghai market and other Asian bourses. Major blue cheap and banks led the decliners amid uncertainties about the pace of the economic recovery after data from the Monetary Authority of Singapore showed lending growth slowed to 2.3% in July compared with the year before. The blue chip Straits Times Index tumbled 49.90 points, or 1.89%, to 2,592.90.

In Taiwan, stock market stretched its Friday fun turning it to Monday mania as it ended the day at one-week closing high, with PC makers such as Compal leading gains after strong quarterly earnings. However, the gains were capped by the events like declines in Chinese stocks, worries of a possible cabinet reshuffle, the Dalai Lama's visit, media reports playing up the threat posed by the H1N1 influenza which kept investors on the sidelines.

The benchmark Taiex share index stretched its winning streak in second session as its finished the session higher by 16.09 points or 0.24% in a day, closing the day at 6825.95, highest closing since 24 August 2009 when market closed at 6838.25.

In India, the key benchmark indices edged lower as a setback in Chinese stocks offset optimism arising from India's strong Q1 GDP growth data. The BSE 30-share Sensex was down 255.70 points or 1.61% to 15,666.64. The S&P CNX Nifty was down 70.25 points or 1.48% to 4,662.10.

On the economic front, India’s gross domestic production (GDP) grew 6.1% in Q1 June 2009 compared with the year-earlier, figures released by the Central Statistical Organisation showed. The segment grouping financing, insurance, real estate and business services led growth in GDP, gaining 8.1% on year. The category including trade, hotels, transport and communication was also up 8.1%. Agriculture, forestry and fishing, by comparison, rose just 2.4% on year. Manufacturing was up 3.4% on year in the April-June 2009 quarter.

The GDP growth was lower than 7.8% achieved in Q1 June 2008 but it accelerated from the 5.8% expansion in Q4 March 2009. Planning Comission deputy chairman Montek Singh Ahluwalia the worst may be over for the economy. He said the economy is expected to improve in the coming quarters. Finance Secretary Ashok Chawla said the economy is slowly bouncing back.

Elsewhere, Malaysia's Kula Lumpur Composite index went down 0.22% or 2.63 points to 1174.27 while stock markets in Indonesia’s Jakarta Composite index ended the day lower at 2341.54.

In other regional market, European stocks were trading lower on Monday, amid somewhat lower volumes with London closed for a holiday, as China's stock markets fell more than 5% on supply worries. The French CAC-40 index slid 0.5% to 3,672.76; the German DAX index fell 0.9% to 5,464.58.

Looking ahead, focus will be on Euro zone CPI estimate that is expected to show - reading for August. In the late evening we have Canadian GDP and Chicago PMI.