Asian markets ease in holiday thin trading

Sydney, Seoul softens while Shanghai shows small up tick

Stock market in Asian region eased on Monday, 21 September 2009, pulling further away from 13-month highs hit last week, as investors worried prices may have raced too far ahead of economic fundamentals, with shares in China feeling supply pressures ahead of a string of IPOs.

On Wall Street, the Dow Jones Industrial Average closed at a new high for 2009 on Friday, amid a handful of expirations known to cause volatility. Referred to as quadruple witching, contracts for stock index futures, stock index options, stock options and single stock futures all expired.

The S&P 500 rose 2.81 points, or 0.3%, to 1068.30. The Dow Jones Industrial Average added 35.28 points, or 0.4%, to 9820.20. The Nasdaq Composite also increased 6.11 points, or 0.3%, to 2132.86. Stocks posted the strongest weekly gains since July - the Dow advanced 2.2%, and the S&P and Nasdaq tacked on 2.5% each - suggesting again that the rally is durable.

In the commodity market, crude oil fell for a third day in New York on speculation further evidence of a global recovery is needed to extend the commodity's 61% gain this year.

Crude oil for October delivery fell as much as 72 cents, or 1%, to $71.32 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $71.37 at 4:46 p.m. in Sydney. Japan, India and Singapore, Asia's major oil trading hub, are closed today for holidays.

Brent crude oil for November settlement fell as much as 70 cents, or 1%, to $70.62 a barrel on the London-based ICE Futures Europe exchange. It was at $70.73 at 4:49 p.m. in Sydney. It declined 0.3% to $71.32 on Sept. 18.

In the currency market, the U.S. dollar bounced back against the yen in Asia, in a technical correction after sustained losses in recent days, but should remain in tight ranges ahead of key events later this week. With many large Asian markets closed for holidays, including Japan, Singapore and India, the dollar was well-supported in low-volume trade, as foreign exchange players await a statement from the U.S. Federal Reserve due Wednesday.

The Japanese yen softened against US Dollar. The Japanese yen was quoted at 92.2010 against the US dollar.

The Hong Kong dollar was trading at HK$ 7.7507 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 after the US dollar received a boost on speculation the Federal Reserve might raise American interest rates sooner than had been expected by the market. At the local close of trade, the dollar was at $US0.8627, down from $US0.8686 on Friday, and off a one-year high of $US0.8776 seen last week.

In Wellington trade, the New Zealand dollar is ripe for a turn - although traders disagree markedly over which way they could go. At 5pm the NZ dollar was buying US70.73c, easing from US70.88c at the 8am today and a 13-month high of US71.55c on Thursday.

The South Korean won rose to a near one-year high against the U.S. dollar as foreigners continued to buy Seoul stocks on economic recovery hopes. The South Korean won closed at 1,204.4 won to the greenback, up 3.4 won or 0.28% from the previous session, the strongest level since 29 September 2008. The Korean unit climbed as high as 1,202.2 won to the dollar at one point.

The Taiwan dollar strengthened against the greenback. The Taiwan dollar was trading higher against the US dollar at NT$ 32.4190, 0.0390 up from Friday's close of NT$32.4580.

In the Asian equities, stock markets closed mostly lower Monday, taking their cue from weakness in Chinese shares. Markets in Japan, India, Malaysia, Singapore, Indonesia and the Philippines were closed for public holidays.

In Mainland China, share market bouncing off from a morning low to finish the session higher, with healthcare, consumer discretionary, and consumer staple sector led the rally ahead of the weeklong National Day holiday, meanwhile Metallurgical Corp of China's listing debut bolstered sentiment. The Shanghai Composite Index, measuring A shares and B shares on the Shanghai Stock Exchange, added 4.34 points, or 0.15% to 2,967.01, while the CSI 300 Index, measuring exchanges in Shanghai and Shenzhen, rose 0.28%, to 3,208.60.

In Hong Kong, the stock market drifted back into negative terrain to finished the session lower, giving up intraday gains as financials, properties, materials, and Mainland Chinese stocks caved into profit-taking pressure amid rekindled concern last week's rally stretched stock valuations more than companies fundamental and the potential recovery in bottom lines. The Hang Seng Index stumbled 150.60 points, or 0.7%, to 21,472.85, while the Hang Seng China Enterprise slipped 196.23 points, or 1.56%, to 12,418.34.

In Australia, the shares market endured losses for second consecutive day, dragged down by major materials and resources stocks after base metal prices fell on the London Metal Exchange on Friday in response to a resurgent US dollar and rising LME inventories. Significant selling pressure in top four banks weighed down financial sector. At the closing bell, the benchmark S&P/ASX200 index stumbled 15.8 points, or 0.34%, to 4,677.4, meanwhile the broader All Ordinaries fell 9.6 points, or 0.2%, to 4,684.1.

On the economic front, Australian bureau of statistics said today that total new motor vehicles sales gained by 0.3%, seasonally adjusted, to 75,388 units in August.

In New Zealand, benchmark index ended the first trading day of the week moderately up in the positive terrain. However, the NZX15, comprising the 15 largest and most liquid domestic securities edged down. The share market registered the fourth day of gain in a row on Monday. The NZX50 edged down 0.81 points or 0.03% to 3155.65. The NZX 15 however, dipped down 0.16% to close at 5765.89.

On the economic front, the service sector continued on its road to recovery as the August result provided the first consecutive monthly expansion since early 2008. The PSI for August stood at 51.3, which was 1.2 points up from July. In comparison with previous years, the August result was 3.4 points up from August 2008, but still 8.1 points down from 2007. Business NZ Chief Executive Phil O'Reilly said the results were positive for two reasons. The first being the historic low point of 43.7 in April looks well and truly over, as new orders/business has been particularly strong over July and August. Although this is still not at the level experienced during 2007, it is quickly heading in the right direction.

In South Korea, stocks closed lower as institutional investors continued their selling streak for a third session. The benchmark Korea Composite Stock Price Index (KOSPI) declined 4.21 points to 1,695.5. Foreign investors snapped up stocks for the 12th straight session, encouraged by South Korea's inclusion in the Financial Times Stock Exchange (FTSE) advanced market category, which was effective as of Monday.

In Taiwan, stock market finished lower, as investors sold high-flying tech shares such as Mediatek that have helped push the market to this year's highest close on Friday, but LCD makers capped losses.

The benchmark Taiex share index continued to swing between gains and losses as it started the third week of September on a lower note by finishing the first day of the bluer by 24.09 points or 0.32% in a day, closing the day at 7502.46, retreating from its fourteen month high status by showing the closing not seen from 27 June 2008 when market closed at 7548.76.

On the economic front, with central banks around the world embracing a wait-and-see attitude toward the anniversary of the global financial tsunami, the Central Bank of Republic China (CBC) in Taiwan is unlikely to raise the policy interest rates at its regular meeting of board directors and supervisors on Thursday.

According to Chinese-language Economic Daily News (EDN), sister publication of Taiwan Economic News (TEN), the CBC will resort to open-market operation to absorb flooding idle fund in the market, while withholding interest-rate hike until the second quarter or third quarter next year, reported the EDN citing sources familiar with the policy-making mode of the Central Bank of Republic China.

Discount rate hit the nadir of 1.25%, a record low, in February 2009, following seven interest cuts by the Central Bank of Republic China since on 16 September 2008, in the wake of the bankruptcy of Lehman Brothers.

Elsewhere, stock markets in Indonesia's Jakarta Composite index ended the day higher at 2456.99.

In other regional market, Europe stocks declined on Monday, as traders moved away from resource and chemical plays that have fronted gains as the economy recovers. By region, the German DAX fell 1.5% to 5,620.94, the U.K. FTSE 100 fell 1% to 5,123.24 and the French CAC 40 weakened 0.8% to 3,795.82.