Asian markets ends higher

G-20 stimulus assurance helps regional retrieval

Stock market in Asian region rose on Friday, 25 September 2009, as G20 leaders pledged in a draft statement to keep some stimulus supports in place until a recovery is clearer.

World leaders at the two-day G20 meeting, which began on Thursday, have reportedly agreed to keep emergency economic supports in place until a durable recovery is secured. They have also reportedly agreed to work together when time comes to remove the economic stimulus. The G20 nations have also reportedly agreed to take steps to rein in financial industry excesses that led to the financial crisis, and to act together to raise capital standards for banks.

Media reports also suggest that the G20 nations have agreed on a 5 percentage point shift in International Monetary Fund voting power from controlling developed countries to underrepresented countries. The move is part of efforts to give emerging economic powers more say in the IMF to recognize their growing influence in the world economy.

On Wall Street, selling in housing, materials and commodity-related stocks stifled the major averages Thursday. Oil plunged more than $3 a barrel, and existing-home sales dropped unexpectedly. The Dow Jones Industrial Average gave up 44 .11 points, or 0.4%, to 9707.44, while the S&P 500 shed 10.09 points, or 1%, to 1050.78. The Nasdaq Composite edged down 23.81 points, or 1.1%, to 2107.61.

On the economic front, the home-sales data squashed initial gains that came as jobless claims fell unexpectedly to 530,000. Continuing claims fell more than expected to 6.14 million, versus 6.23 million the month prior.

In the commodity market, crude oil rose as some traders viewed this week’s slump as excessive, providing an opportunity to buy contracts before rising demand triggers a rebound.

Crude oil for November delivery rose as much as 81 cents, or 1.2 percent, to $66.70 a barrel on the New York Mercantile Exchange, and traded at $66.29 at 10:25 a.m. in London.

Brent crude for November settlement climbed as much as 83 cents, or 1.3 percent, to $65.65 a barrel on the London-based ICE Futures Europe exchange, and was at $65.40 at 10:26 a.m. London time.

Gold, trading below $1,000 an ounce in London today, headed for its biggest weekly decline in more than two months as a stronger dollar curbed the metal’s appeal as an alternative investment. Immediate-delivery bullion added $2.35, or 0.2 percent, to $996.45 an ounce by 9:55 a.m. London time.

In the currency market, US dollar rebounded strongly yesterday on further speculation that Fed is paving the way to exit from current stimulus programs. Fed said that it will scale back the emergency lending program and reduce the combined initiatives down from $450 billion to $100 billion by January and will evaluate whether to maintain the Term Auction Facility on a permanent basis and put out for public comment a “range of possible structures for a permanent TAF."

The Japanese yen strengthened against major currencies. The Japanese yen was quoted at 90.14 against the US dollar.

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 clawed back losses on Friday after a bout of buying late in the day helped put it on track for weekly gains for the sixth straight week. At the local close, the dollar was trading at $US0.8693, down from Thursday’s close of $US0.8741.

In Wellington trade, The New Zealand dollar rose through the first part of the night against major currencies, but then fell away as the greenback rallied amid a wave of risk aversion. By 8am the NZ dollar was buying US71.67c, down from US71.95c at 5pm yesterday and after having peaked during the overnight session around US72.70c shortly after midnight.

The South Korean currency ended at 1,186.1 won against the dollar, up 9.6 won from Thursday's close, as offshore investors sold the greenback.

The Taiwan dollar weakened further against the greenback. The Taiwan dollar was trading lower against the US dollar at NT$ 32.4050, 0.0100 down from Thursday’s close of NT$32.3950.

In Asian equity market, a rush of sell orders for Nomura Holdings hammered down the Japanese financial sector Friday after the Japanese brokerage house announced its second large share offering in six months, reigniting concerns about equity dilution.

In Japan, the stock market ended in negative territory dragged down securities after Nomura Securities unveiled plans to raise huge funds for the second time and financials declined on concerns about the impact of stricter capital norms and moratorium proposal for small companies. Weak closing in Wall Street in the previous session also impacted market sentiment.

The benchmark Nikkei 225 Index ended at 10,266, representing a loss of 278.24 points, or 2.64%, while the broader Topix index of all first section stocks was down 27.53 points, or 2.90%, to 922.67.

On the economic front, the Bank of Japan released the minutes of the August 10-11 meeting, which revealed that the board members expressed confidence that the Japanese economy was finally starting to show signs of bottoming out. "Financial conditions, while remaining generally tight, had continued to show signs of improvement," the minutes said.

In a separate statement, the Bank of Japan revealed that an index measuring corporate service prices in the country was down 3.5% on year in August, posting a score of 92.2. That was exactly in line with analyst expectations following the 3.4 percent annual contraction in July.

In Mainland China, the stocks ended slightly lower on Friday, with metal stocks leading the losses. The benchmark Shanghai Composite Index, which covers both A shares and B shares on the Shanghai Stock Exchange, edged down 0.52% or 14.71 points and closed at 2,838.84 points after fluctuating between 2,864.07 and 2,812.92 points. The Shenzhen Component Index on the smaller Shenzhen Stock Exchange decreased 0.8% or 91.72 points to 11,384.16 points, after touching an intraday low of 11,261.7 points.

In Hong Kong, stocks finished Friday with fall. The Hang Seng Index, the benchmark, opened 239 points higher at 20,810. After touching the intraday low of 20,766.46 points, the blue-chip Hang Seng Index fell 26.33 points or 0.13% to close at 21,024.4.

In Australia, stock markets ended moderately higher, after an impressive turnaround on the back of strong gains in the financial sector. In Australia, the benchmark S&P/ASX200 gained 12.1 points or 0.26% ending the day at 4713.30. The broader All Ordinaries added 6.8 points or 0.14% closing at 4714

In New Zealand, equity market ended the week in the negative following frail foreign markets. The share market registered second consecutive decline in a row on Friday. Asian markets were weak with Japanese shares leading the sell-off trailing markets on the United States overnight. Meanwhile, disappointing U.S. housing data along with sharp falls in metals and energy prices on Thursday battered sentiment in Asia. The NZX50 decreased 0.53% or 19.10 points to 3111.25. The NZX 15 was down 0.38% or 21.50 points to close at 5704.86.

On the economic front, New Zealand’s value of both merchandise exports and imports fell in August 2009 compared with August 2008, down 23.2 percent and 21.6 percent, respectively. Export values have now returned to a level similar to what they were in August 2007, before the large value rises observed in dairy and crude oil exports in the latter half of 2007 and during 2008. The trade balance for August 2009 was a deficit of $725 million or 26.4 percent of the value of exports. This compares with an average August deficit of 34.1 percent of exports for the previous five years.

In South Korea, stocks closed lower Friday on strong foreign and institutional selling sparked by overnight falls on Wall Street. The benchmark Korea Composite Stock Price Index (KOSPI) fell 2.4 points to 1,691.48. Foreign investors dumped a net 151.9 billion won worth of tech and financial large caps. Institutional investors continued their selling streak for a seventh session.

In Taiwan, stock market snapped its losing streak helped by financial shares, after Taiwan’s central bank kept interest rate unchanged and said the pace of economic contraction had eased. The benchmark Taiex share index finally snapped its four-day losing streak by finishing the last session of the third week of September higher by 21 points or 0.29% in a day, closing the day at 7345.22.

On the economic front, Taiwan’s M2 money supply grew 8.17% year-on-year in August, the fifth straight month for the broadly defined money supply to score growth exceeding the target zone set by the Central Bank of China (CBC).

According to the data released by Central Bank of China, the growth rate dropped slightly by 0.16% from the July level but still surpassed the Central Bank of China’s targeted growth range of 2.5-6.5%. Moreover, M1B money supply, or money supply in narrower definition, jumped 22.14% year-on-year in August.

In Philippines, equities slid following a generally weak undertone in the Asian equities as risk aversion ruled the roost ahead of the weekends. The recent Asian Development Bank forecast, which stated that the Filipino economy would slow down to slow to 1.6%, this year on concerns over job security and falling export demand also weighed heavy on the domestic markets. The benchmark index PSEi fell 0.56% or 16 points to 2,821.34, while the All Shares index lost 0.31% or 5.76 points to 1,806.92.

In India, volatility ruled the roost as the key benchmark indices slipped on mostly lower global stocks. Investors took home some cash ahead of a long weekend and with the market open only for three days next week. The market remains closed for a public holiday on Monday, 28 September 2009 and again on Friday, 2 October 2009. The BSE 30-share Sensex was down 88.43 points or 0.53% to 16693. The S&P CNX Nifty was down 27.60 points or 0.55% to 4,958.

Elsewhere, Malaysia's Kula Lumpur Composite index went down 0.06% or 0.67 points to 1217.39 while stock markets in Indonesia’s Jakarta Composite index ended the day lower at 2444.58.

In other regional market, European shares traded in a tight range on Friday, with gains from commodity-sector stocks offsetting losses for industrials. Equity markets on the Continent were lackluster with the German DAX index down 0.1% at 5,599.78 ahead of the weekend's election and the French CAC-40 index down 0.2% at 3,752.11. The U.K. FTSE 100 index rose 0.4% to 5,098.35.