Asian markets accelerates further

Sensex, Sydney, Seoul lead the regional rally while Shanghai bucks the trend

Stock market in Asian region accelerated on Thursday, 10 September 2009, as hopes for global economic recovery prompted investors to shift into riskier assets, while oil found support above $US71 a barrel following OPEC's decision to keep output steady. The investor shift kept the US dollar on the defensive. It hit its weakest value in almost a year on Wednesday and was holding just above that level on Thursday.

As South Korea and New Zealand kept interest rates at record lows, Asian share markets were underpinned by a 0.5 per cent gain in the Dow Jones Industrial Average and the Federal Reserve's Beige Book survey, which showed the US economy was stabilising although many key sectors remained weak.

On Wall Street, the markets were upbeat yesterday, after Steve Jobs took the stage at Apple's media event and the Federal Reserve said economic conditions are stabilizing. The Dow Jones Industrial Average added 49.88 points, or 0.5%, to 9547.22, while the S&P 500 edged up 7.98 points, or 0.8%, to 1033.37. The Nasdaq Composite advanced 22.62 points, or 1.1%, to 2060.39.

On the economic report, the Federal Reserve said reports from its 12 districts showed economic activity continued to stabilize in July and August. Consumer spending remained soft, and residential real estate markets remained weak, although there were signs of improvement, according to the beige book. Most districts reported that loan demand and labor markets were also weak, although they also reported modest improvements in the manufacturing sector, an uptake in temporary hiring and a decline in the pace of layoffs.

Among the day's economic data, the Mortgage Bankers Association said early Wednesday that its seasonally adjusted index of mortgage applications, including both purchase and refinance loans, increased 17% to 648.3 for the week ended 4 September 2009. That's its highest level since May.

In the commodity market, crude oil rose for a fourth day in New York as the falling dollar spurred investors to buy commodities and the International Energy Agency raised its global oil demand forecast for next year for a second month.

Crude oil for October delivery rose as much as $1.13, or 1.6%, to $72.44 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It traded at $72.18 a barrel at 9:21 a.m. in London.

Brent crude oil for October settlement rose as much as 87 cents, or 1.3%, to $70.70 a barrel on the London-based ICE Futures Europe exchange.

Gold gained as the dollar traded near the lowest level since December against the euro, boosting demand for the precious metal as a store of value. Gold for immediate delivery climbed 0.4% to $996.24 an ounce at 2:47 p.m. in Singapore. Bullion climbed to an 18-month high of $1,007.70 an ounce Sept. 8. The December- delivery contract on the Comex division of the New York Mercantile Exchange was little changed at $997.70 an ounce.

In the currency market, central bank meetings dominate the forex markets today. Kiwi was a touch softer after RBNZ left rates unchanged at 2.50% and maintained a dovish tone in its statement. Aussie is also pressured by mixed employment report released overnight, which prompted economists to rethink the rate path of RBA.

The Japanese yen strengthened against major currencies. The Japanese yen was quoted at 92.15 against the US dollar and 132.98 against euro.

The Hong Kong dollar was trading at HK$ 7.7504 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 slipped on Thursday, retreating from one-year highs, after a surprisingly big fall in employment in August undermined market expectations for an interest-rate hike as early as next month. The dollar, which hit a one-year peak of $US0.8669 offshore on Wednesday, fell to a low $US0.8579 after data showed 27,100 jobs were lost last month, more than double the number expected. It closed locally at $US0.8596, with losses capped by a weaker US dollar and buoyant Asian stocks.

In Wellington trade, the New Zealand dollar hit a one-year high against a generally weakening greenback, remaining firmly above US69c. Around 5pm yesterday the NZ dollar had slipped back to the US69.10c area, but within the next few hours it strengthened quickly, peaking early today at US69.83c. By 8am the kiwi was buying US69.60c amid a growing appetite for risk and renewed concerns about the status of the US dollar as the world's reserve currency.

The South Korea won closed at 1,224.5 won to the U.S. dollar, up 2.5 won from Wednesday's close, as global stock rallies stoked investors appetite for risky assets.

Coming back in equities, Asian markets ended mostly higher, with Japan's benchmark index gaining as bargain hunters snapped up banks and technology stocks after recent declines.

In Japan, shares market jumped on the back of a positive lead from Wall Street and on continued hopes of a rebound in the global economic activity prompted investors to shift into riskier assets. The market witnessed broad based buying across the sectors, as market participant were confidence in a recovery in corporate earnings and the economy. But gains were capped as the yen's strengthened against the dollar. The Nikkei 225 Stock Average index spurted 201.53 points, or 1.95%, to 10,513.67, meanwhile the broader Topix was up 18.65 points, or 1.98%, to 958.49.

On the economic front, the Cabinet Office said that Japanese core machinery orders fell a seasonally adjusted 9.3% on the month to 664.7 billion yen in July. The Bank of Japan revealed that producer prices slid 8.5% in August from a year earlier.

In Mainland China, share market dropped first time in eight days, with materials and securities firms leading the decline due to profit taking amid concerns that recent gains in the market were overcooked. Investors sold shares as sentiment turned cautious ahead of the August key economic data due to release Friday. At the closing bell, the Shanghai Composite Index, measuring A shares and B shares on the Shanghai Stock Exchange, stumbled 21.38 points, or 0.73% to 2,924.88, while the CSI 300 Index, measuring exchanges in Shanghai and Shenzhen, declined 1%, to 3,162.91.

On the economic front, China's National Bureau of Statistics said house prices in 70 major cities rose 2% in August from the previous year, following July's 1% increase.

In Hong Kong, stock market surged with benchmark Hang Seng index touched a year high, as hopes of an economic recovery lifted sentiment. Financials and properties leading the rally amid confidence the global economy is recovering and as the National Bureau of Statistics said house prices in 70 Chinese cities rose 2% in August. Materials, energy, and retailers stocks gained on speculation earnings growth will recover. The Hang Seng Index climbed up 218.52 points, or 1.05%, to 21,069.56, while the Hang Seng China Enterprise put on 111.28 points, or 0.92%, to 12,216.82.

In Australia, the shares market touched fresh eleven month high with broad based gains across the sector, boosted by positive close of Wall Street overnight and strong movement across the Asian region. But gains were trimmed as employment data showed more job losses than expected. At closing bell, the benchmark S&P/ASX200 index added 48.6 points, or 1.07%, to 4,570.80, meanwhile the broader All Ordinaries gained 46.4 points, or 1.02%, to 4,573.50.

In the economic front, the Australian Bureau of Statistics reported that the seasonally adjusted unemployment was 5.8% in August, in line with the July reading. Despite the overall unemployment rate remaining steady, full-time jobs slipped by 30,800 while part-time jobs increased by 3,800.

In New Zealand, the share market lifted after Reserve Bank Governor Alan Bollard left the official cash rate unchanged at a record low 2.5%. In his announcement today, Dr Bollard also repeated his message that the Reserve Bank continued to expect the OCR to remain at or below current levels until the latter part of 2010. He focused on risks to the present "patchy" recovery posed by the rise of the New Zealand dollar and the possibility a recovery in house prices could undermine improvements in household savings. The NZX50 edged up 0.33% or 10.27 points to 3126.68. The NZX 15 increased 0.42% or 23.98 points to close at 5735.24.

In South Korea, shares closed higher on reinvigorated foreign buying and steep gains in shipbuilding, shipping and brokerage issues. The benchmark Korea Composite Stock Price Index (KOSPI) jumped 36.91 points to 1,644.68, the highest closing since 1 July 2008.

On the economic front, the Bank of Korea (BOK) announced that it would keep the key rate steady at a record low of 2 percent for another month as widely expected. The BOK head gave an upbeat appraisal of the country's economy in the second half by saying it would outperform the bank's estimate, easing concerns about the sustainability of the Kospi's recent steep gains.

In Singapore, stock market surged emulating overnight gains on Wall Street, where confidence in a recovery in corporate earnings and the economy drove buying. Banks and major blue chip added the most on the Strait index following signs of an economic recovery in the US overnight. The blue chip Straits Times Index spurted 31.54 points or 1.19%, to 2,682.02.

In Taiwan, stock market come back to gains, after the reports showing the memorandum of understanding for cross-Taiwan Strait cooperation in financial supervision is ready for signing, as both sides have ironed out their differences over the document almost entirely.

According to the reports published by the Chinese-language Economic Daily News (EDN), sister publication of Taiwan Economic News (EDN), the MOU will lay the groundwork for both sides to open up their financial markets mutually, allowing, among other things, seven Taiwanese banks to upgrade their existing representative's offices in China to branches and China's qualified domestic institutional investors (QDII) to invest in Taiwan's stock market instantly. It will also allow domestic securities firms to set up operations in China.

The benchmark Taiex share index flip losses with gains as its finished the session higher by 81.36 points or 1.12% in a day, closing the day at 7332.08, the closing not seen from 24 July 2008 when market closed at 7368.08.

On the economic front, Taiwan's consumer price index (CPI) shot up by 1.8% from a monthly earlier to 106.17 in August, yet dropped by 0.81% from that last year.

According to the Cabinet-level Directorate General of Budget, Accounting and Statistics (DGBAS), in the same month the wholesale price index (WPI) posted a sharp monthly rise of 2% to 104.43; while import price index jumped by 2.09% and export price index by 1.36%.

Wu Chao-ming, a section chief at DGBAS, indicated that Taiwan is currently free from the pressure of deflation since the monthly rise of commodity prices in August already exceeded that of the full-year expectation and the price index is very likely to keep rising.

Impacted by Typhoon Morakot, Taiwan saw an average monthly rise of 6.66% in food prices in August, during which vegetable and fruit prices rose 54.46% and 19.42%, respectively. During the month the WPI went up by 2% and among the commodities basic metals, raw chemical materials, crude oil, and natural gas all rose in price.

In the first eight months of the year the average CPI dipped by 0.72% from that recorded in the same period of last year and in August alone the core CPI, excluding prices of fresh vegetables, fruits and fish as well as energy, recorded an annual drop of 0.78%, the largest fall of its kind since August 2003.

In Philippines, the equities managed to end on a mildly positive note, reversing the dull sentiments in the intraday moves as an upbeat tone in the Asian equities supported the index. Risk appetite pushed up the Philippines equities in intraday moves even as the merchandise exports from the country took a further beating in July. At the final bell, the benchmark index PSEi mounted 0.22% or 6.50 points to 2,835.91, while the All Shares index increased 0.20% or 3.77 points to 1,807.21.

In India, the key benchmark indices closed with small gains after giving up strong intraday gains as European markets dropped. Both the key benchmark indices - the Sensex and the S&P CNX Nifty, 10 September 2009, hit their highest level in more than 15 months in intraday trade. Banking and metal stocks gained. Realty and auto stocks declined.

The BSE 30-share Sensex was up 33.31 points or 0.21% to 16,216.86. The Sensex rose 251.22 points the day's high of 16,434.77 in morning trade, its highest since 2 June 2008. The barometer index fell 17.13 points at the day's low of 16,166.42 in late trade.

The S&P CNX Nifty was up 5.15 points or 0.11% to 4819.20. It hit a high of 4889.05 earlier in the day, it's highest since 2 June 2008

Elsewhere, Malaysia's Kula Lumpur Composite index went up 0.40% or 4.82 points to 1201.28 while stock markets in Indonesia's Jakarta Composite index ended the day higher at 2411.86.

In other regional market, European shares turned lower, backing away from 2009 highs and losing ground for the first time in six sessions. U.K. FTSE 100 index lost 0.4% to 4,985.28, the French CAC-40 index slipped 0.4% to 3,693.50 while the German DAX index lost 0.1% to 5,571.61.