Asian markets step in Wall Street shoes

Nikkei lead the regions gain while Hang Seng, Taiex, Sydney fell further

Stock market in Asian region finished lower on Thursday 24 September 2009, mirroring investor caution in the United States, while the US dollar was steady after the Federal Reserve reiterated interest rates would stay low for a long period.

On Wall Street, late-day selling in energy and commodity stocks left the major averages up to 1% lower Wednesday as Wall Street brushed off the Federal Reserve's latest statement. The Dow Jones Industrial Average fell 81.32 points, or 0.8%, to 9748.52, while the S&P 500 gave up 10.79 points, or 1%, to 1060.87. The Nasdaq Composite ticked down 14.88 points, or 0.7%, to 2131.42.

On the economic front, the Federal Reserve said it would keep its key interest rate target at near zero, signaling that one of the first tools it used to battle the financial crisis is likely to be the last it returns to its toolkit. The central bank's Federal Open Markets Committee unanimously maintained its target rate at a range between zero and 0.25%, where it has stood since December.

In the commodity market, crude oil declined for a second day in New York after a U.S. government report showed a larger-than- expected increase in fuel stockpiles in the world’s largest energy-consuming nation.

Crude oil for November delivery fell as much as 87 cents, or 1.3%, to $68.10 a barrel in electronic trading on the New York Mercantile Exchange. It was at $68.49 at 2:15 p.m. Singapore time. Yesterday, the contract dropped 3.9% to settle at $68.97.

Brent crude for November settlement dropped as much as 61 cents, or 0.9%, to $67.38 a barrel on the London-based ICE Futures Europe exchange. It was at $67.56 at 2:12 p.m. Singapore time.

Gold advanced on speculation a recovery in global economies will fuel inflation, prompting investors to buy the metal as a hedge against higher prices. Gold for immediate delivery rose as much as 0.5% to $1,013.01 an ounce and traded at $1,012.41 at 2:37 p.m. in Singapore.

In the currency market, US dollar rebounded strongly after post FOMC spike, helped by sharp reversal in US stocks and further weakness in crude oil. Broad based weakness is seen in Asian equities, except Japan, which provides further support to the greenback and triggers sharp rally in the Japanese yen.

The Japanese yen strengthened against major currencies. The Japanese yen was quoted at 90.45 against the US dollar and 134 against euro.

The Hong Kong dollar was trading at HK$ 7.7503 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 closed marginally higher today as traders adjusted their portfolios ahead of the Group of 20 leaders meeting, which begins overnight Australian time. At the local close, the dollar was trading at $US0.8741, up from Wednesday’s close of $US0.8739. During the domestic session, the unit moved between $US0.8651 and $US0.8749.

In Wellington trade, the New Zealand dollar fell away sharply today, with the decline coming soon after a statement from the United States Federal Reserve. During the early hours, the kiwi dropped from around US72.80c to the US72c level, near where it was before data indicating an end to recession caused a meteoric rise to a brief peak a little above US73c yesterday morning.

The South Korean currency ended at 1,195.7 won against the dollar, down 1.3 won from Wednesday's close, as foreigners sold the Korean currency.

The Taiwan dollar weakened against the greenback. The Taiwan dollar was trading lower against the US dollar at NT$ 32.3950, 0.0340 down from Wednesday’s close of NT$32.3690.

Coming back in equities, Japanese shares made a solid showing in their resumption of trading after an extended holiday, while Hong Kong stocks closed Thursday's session lower, reflecting a mixed performance across the region.

In Japan, shares market advanced, as investors returned from an extended break and as the US Federal Reserve’s upbeat assessment of the economic prospects for the world’s largest economy outweighed fears about a stimulus withdrawal by the Fed. Japan’s markets were closed from 21 September 2009 to yesterday for national holidays.

At the closing bell, the Nikkei 225 Stock Average index surged 173.68 points or 1.67%, to 10,544.22, while the broader Topix spurted 10.76 points, or 1.15%, to 950.20.

On the economic front, the finance ministry said Thursday Japan’s exports tumbled 36% in August to 4.5 trillion yen, dragged down by slumping global demand for cars and steel products. Imports in August plunged 41.3% from a year earlier to 4.3 trillion yen, resulting in a trade surplus of 190 billion yen.

Japan’s oil and natural gas imports fell in August because of lower energy demand from factories and as consumers switched off air conditioners because of cooler summer weather. Japan shipped in 17.83 million kiloliters, or about 3.62 million barrels a day, of crude oil last month, down 12.4% from a year earlier, according to preliminary finance ministry trade report.

In Mainland China, share market bounced back from morning low to finish the session higher, snapping two days of loosing streak, supported by banks and financials and properties stocks as investors logs to short covering on hopes recent sell off on worries about apparent liquidity in the market was overdone. The Shanghai Composite Index, measuring A shares and B shares on the Shanghai Stock Exchange, recovered 10.83 points, or 0.38%, to 2,803.97, while the CSI 300 Index, measuring exchanges in Shanghai and Shenzhen, bounced 0.68%, to 3,080.93.

On the economic front, China's insurance industry realized 759.5 billion Yuan in insurance premium income during the first eight months of this year, 6.5% more than in the same period of last year, according to statistics released by the China Insurance Regulatory Commission yesterday.

In Hong Kong, the stock market dropped with broad based sell off across the sector following a weak lead from Wall Street and Shanghai markets, fall in commodity prices, and on persistent worries about liquidity squeeze. Sentiments were further hurting by worries about government economic stimulus withdrawal and lackluster performance of debutante Metallurgical Corp. of China. The Hang Seng Index stumbled 544.79 points, or 2.52%, to 21,050.73, while the Hang Seng China Enterprise slid 384.56 points, or 3.09%, to 12,047.25.

In Australia, the shares market weighed down by tracking a poor session on Wall Street overnight and a fall in commodity prices. Weaker metals prices dragged down shares of Anglo-Australian miners BHP Billiton and Rio Tinto, while Woodside Petroleum and Oil Search stumbled due to steep pullback in crude oil prices on demand concerns resurface. Losses among larger media and retail stocks dragged down consumer discretionary sector.

At the closing bell, the benchmark S&P/ASX200 index slipped 32.9 points, or 0.69%, to 4,701.2, meanwhile the broader All Ordinaries melted 33 points, or 0.7%, to 4,708.

On the economic front, the Reserve Bank of Australia said in its Financial Stability Review published Thursday “Conditions in the global financial system have improved significantly since the last Financial Stability Review in March”. The central bank report said Australia’s financial system has “remained resilient”, with the nation’s banks experiencing “only a modest decline in profitability”.

The Housing Industry Association said that the sale of new homes in Australia surged 11% in August compared to the previous month. The number of detached house sales increased by 11.8% in August, while the number of apartments sold rose by 7.5%.

In New Zealand, stock market ended lower following a dull session on the Wall Street overnight subsequent to yesterday’s gain after data revealed that the New Zealand economy has managed to crawl out of its 15-month recession. The NZX50 decreased 0.56% or 17.49 points to 3130.42. The NZX 15 was down 0.66% or 37.86 points to close at 5726.36.

In South Korea, stocks fell pushing the key index below the 1,700-mark as investors took profits from recent gains. The benchmark Korea Composite Stock Price Index (KOSPI) lost 17.59 points to 1,693.88 after staying above the 1,700-mark for two days. The dip follows steady gains that pushed the KOSPI to its highest levels in 15 months.

In Singapore, stock market tumbled down on tracking weak cues from Wall Street overnight and other Asian bourses, and falling commodity prices. Major banks stocks were lower, with DBS and OCBC leading declines after Singapore’s consumer prices fell for a fifth straight month in August and on fears about a stimulus withdrawal by the Fed. The blue chip Straits Times Index was ended at 2,667.43, lost 18.51 points, or 0.69%.

In Taiwan, stock market extended their losing streak for fourth straight session as financial and technology stocks fail to show an up tick. The benchmark Taiex share index continued shift lower in the fourth session of the third week of September as it finishing lour by 52.54 points or 0.71% in a day, closing the day at 7324.22, weakest closing since 14 September 2009.

On the economic front, the government planned to raise business tax by one percentage point to 6% by 2013, thereby generating NT$45 billion of extra income annually to be used to fund the national pension and strengthen national finance, said Lee Sush-der, finance minister on yesterday.

In Philippines, the stock market closed lower in line with the regional market, as investors looked in profits after the sharp rebound during the previous day's trading. Investor’s took cues from the losses on Wall Street, as they reacted to the Federal Reserve announcement that it would maintain its stimulus program to nurture a fragile recovery.

The benchmark index PSEi fell 0.18% or 5.17 points to 2,837.34, while the All Shares index lost 0.61% or 11.15 points to 1,812.68.

On the economic front, the Bangko Sentral ng Pilipinas (BSP) -central bank- sees inflation picking up starting this month until the rest of the year as "base effects" from last year’s record-high commodity prices wane and the world economy recovers. BSP simulations saw inflation was averaging 3% this year, well within the central bank’s 2.5%-4.5% target. A slight pick-up is expected in 2010, with inflation likely averaging at 3.3%, slightly below the BSP’s 3.5%-4.5% target for that year.

Amid easing inflation, the BSP cut its policy rates by a total of 200 basis points to spur economic growth. After six consecutive cuts since December last year, the benchmark overnight borrowing rate now stands at a record low of 4%. Policy rates were kept on hold at the Monetary Board’s last meeting on 20 August, leaving market players speculating on when the BSP will start tightening policy.

In India, the key benchmark indices moved into the positive zone in late trade. Volatility ruled the roost in the last one hour of trade as traders rolled over derivatives contracts from September 2009 series to October 2009 series ahead of today's expiry of September 2009 contracts. Recovery in US index futures aided a strong intraday rebound on the domestic bourses.

The BSE 30-share Sensex was up 61.93 points or 0.37% to 16781.43. The S&P CNX Nifty was up 16.60 points or 0.33% to 4,986.55.

On the economic front, India's headline inflation gained for the second straight week, data released by the government during trading hours today showed. Inflation based on the wholesale price index rose 0.37% in the year through 12 September 2009, higher than previous week's gain of 0.12%. The food article index was responsible for the rise in inflation. The index surged 15.64%. The government revised upwards headline inflation for the week ended 18 July 2009 to a fall of 0.54% from a provisional decline of 1.54%.

Elsewhere, Malaysia's Kula Lumpur Composite index went down 0.08% or 1.01 points to 1218.06 while stock markets in Indonesia’s Jakarta Composite index ended the day higher at 2468.90.

In other regional market, European shares fell for the first time in three sessions on Thursday, with investors taking profits after policy decisions from the U.S. Federal Reserve and a smaller-than-expected rise in a key German sentiment indicator. On a regional level, the U.K. FTSE 100 index lost 0.4% to 5,117.03, the German DAX index declined 0.4% to 5,676.85 and the French CAC-40 index fell 0.5% to 3,801.50.