Asian markets swing back to gains

Shanghai pull up regional activity as Hang Seng, Taiex follows while Sensex, Sydney retreats

Stock markets in Asian region were pulled up by Chinese stocks on Thursday, 3 September 2009, after a top securities regulator assured investors that the country's market was healthy and that there would be continued support for blue-chip companies.

On Wall Street, stocks closed in slightly negative territory after much indecision and little reaction to the latest Fed minutes and economic data. Wall Street instead looked ahead to the more highly anticipated unemployment report at the end of the week. The Dow Jones Industrial Average ultimately gave up 29.93 points, or 0.3%, to 9280.67, while the S&P 500 edged down 3.29 points, or 0.3%, to 994.75. The Nasdaq Composite shed 1.82 points, or 0.09%, to 1967.07.

On the economic front, ADP said that there were 298,000 jobs lost in the private sector in August, an improvement from the 360,000 in July. That report comes ahead of Friday's unemployment reading, the most anticipated data of the week.

Factory orders also fell short of expectations as the Department of Commerce said orders increased 1.3% in July, after a 0.9% increases the month prior. Meanwhile, the Department of Labor said productivity increased more than expected, by 6.6%, after a 6.4% increase the month prior.

In the commodity market, crude oil rose and traded near $69 a barrel in New York as Chinese equities advanced the most in six months, spurring speculation that the country’s economic growth will lead to a rebound in fuel consumption.

Crude oil for October delivery increased as much as $1.34, or 2%, to $69.39 a barrel on the New York Mercantile Exchange, and traded at $69.13 at 12:01 a.m. in London. Yesterday, the contract settled unchanged at $68.05, the first time this has happened since 24 November 2006.

Brent crude oil for October settlement traded at $68.24 a barrel, up 58 cents, on the London-based ICE Futures Europe exchange at 11:34 a.m. London time. Yesterday, the contract declined 7 cents to $67.66, the lowest settlement since 29 July 2009.

Gold climbed to three- month highs in London as a weakening dollar boosted demand for the precious metals as alternative investments. Gold for immediate-delivery bullion advanced as much as $6.40, or 0.7 percent, to $984.90 an ounce, the highest since June 3. It traded at $983.40 by 11 a.m. local time.

In the currency market, US dollar was dragged down by the sharp rally in Gold overnight and remains soft against major currencies. On the other hand, yen also retreats mildly following rebound in Asian stocks which saw Shanghai A shares rose an impressive 5.01%

The Japanese yen was stronger against major currencies as investors continued to trim dollar holdings after disappointing jobs report from US. The Japanese yen was quoted at 92.2 per greenback, down from Wednesday’s quote of 92.65 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 rose after a solid rally in Chinese stocks supported demand for riskier currencies, in an otherwise featureless market. At the local close, the dollar was trading at $US0.8385, up from $US0.8333 on Wednesday. Against the yen, it climbed to 77.46 yen, from the day's low of 76.58, but unchanged from Wednesday.

In Wellington trade, the New Zealand dollar rose in afternoon trading to close near session highs as the Chinese stock market rebounded. By 5pm the NZ dollar was buying US67.50c, up from US67.27c at 8am, but little change from US67.54c at 5pm yesterday. The NZ dollar had dropped near US66.80c, its lowest level in a fortnight, in overnight trading on Wednesday but it was a different story today.

The South Korea won closed at 1,246 won to the U.S. dollar, up 3.9 won from Wednesday's close, as South Korean exporters dumped the greenback.

The Taiwan dollar strengthened against the greenback. The Taiwan dollar was trading higher against the US dollar at NT$ 32.8800, 0.0380 higher from Wednesday’s close of NT$32.9180.

Coming back in equities, Chinese stocks posted their biggest percentage gain since March, as metals and financial shares soared on speculation the government will act to support markets after a sell-off last month.

In Japan, shares market dropped following weak leads from markets across the globe yesterday prompted investors to take out money from cyclical sector. Meanwhile concerns about the US economic outlook following dismal jobs data and stronger yen fueling the decline. Dainippon Sumitomo Pharma outperformed in Tokyo after the company said it was in talks for the acquisition of an unnamed US firm. At the closing bell, the Nikkei 225 Stock Average index slipped 65.82 points, or 0.64% from Wednesday to 10,214.64, meanwhile the broader Topix slid 7.04 points, or 0.74%, to 942.77.

In Mainland China, share market endured gains for third consecutive day on hopes recent decline make stocks valuation attractive and as the securities regulator reassured investors it would promote the healthy development of capital markets. Banks and financials and properties surged following reports that lending by China's big four state-owned banks totaled 160 billion Yuan in August. Energy stocks rebounded as the China raised gasoline and diesel prices by 300 Yuan ($44.1) per ton, or 4% earlier this week.

At the closing bell, the Shanghai Composite Index, measuring A shares and B shares on the Shanghai Stock Exchange, rose by 130.05 points, or 4.79% to 2,845.02, while the CSI 300 Index, measuring exchanges in Shanghai and Shenzhen, advanced 5.57% or 161.04 points, to 3,051.96.

On the economic front, the official China Securities Journal said Thursday new lending by China's big four state-owned banks totaled 160 billion Yuan ($23.4 billion) in August, slightly less than the roughly 165 billion Yuan lent in July by the top four banks.

In Hong Kong, benchmark index surged with broad based gains across the major sector, as investor elected to put money into the market after Chinese regulatory authority assured investors that it would provide the stable and healthy development of capital market. China related stocks led the rally on tracking gains in Shanghai and gold miners soared up after a precious metal bounced overnight. Metal stocks bounced back after Aluminum Corporation of China lifted its forecast for global aluminum consumption, and on optimism that the city’s economy might recover completely by mid-2010.

The Hang Seng Index surged 239.68 points, or 1.23%, to 19,761.68, while the Hang Seng China Enterprise added 236.82 points, or 2.12%, to 11,429.21.

In Australia, the shares market finished the session lower, after dancing in and out of the boundary as of weak lead from offshore market and weaker commodity prices. Financials dropped as very weak lead from the US peers. Property trusts stocks tumbled amid broad sell off compounded by global economy worries. Materials and resources were recouped early losses on bargain hunting, while oil related shares were in negative territory on a softer oil price.

At the closing bell, the benchmark S&P/ASX200 index dropped 8.60 points, or 0.19%, to 4,429.6, meanwhile the broader All Ordinaries erased 3.7 points, or 0.08%, to 4,432.9.

On the economic front, the Australian Bureau of Statistics found that the balance of trade was in a larger than expected A$1.556 billion deficit in July, seasonally adjusted. Exports were down A$283 million or 1% to A$20.041 billion, while imports climbed A$736 million or 4% to A$21.598 billion.

Meanwhile, the Australian Industry Group-Commonwealth Bank performance of services index (PSI) moved closer to a level of expansion in August. The PSI increased 3.9 index points to 48.

In New Zealand, the share market gained today but there was a dearth of corporate news to provide direction. The benchmark NZSX-50 index closed up 16.921 points, or 0.55%, at 3091.57. The NZX 15 increased 0.97% or 54.81 points to close at 5686.26.

In South Korea, stocks finished 0.02% higher after range-bound trading Thursday as investors hunted for bargains. The benchmark Korea Composite Stock Price Index (KOSPI) managed to add 0.37 points to 1,613.53 after moving in a narrow range.

In Singapore, stock market rose following strong performance of Shanghai and other Asian market. Investors chased for bargain hunting in major banks and blue chips stocks. The blue chip Straits Times Index advanced 28.43 points, or 1.11%, to 2,598.36.

In Taiwan, stock market traveled to five week high extending its September surge, with AU Optronics outperforming after the LCD Company said it was considering building a panel plant in China. The benchmark Taiex share index stretched its winning streak in fifth session as its finished the session higher by 64.88 points or 0.92% in a day, closing the day at 7104.65, highest closing since 28 July 2009 when market closed at 7142.63.

On the economic front, Mark Mobius, manager of Franklin Templeton Fund, warned that the Taiex index may be in for a 10-30% correction after having experienced a round of rally.

In a seminar sponsored by Franklin Securities Investment Consulting, Mobius, dubbed as godfather of emerging markets, though, stressed his confidence in the long-term outlook of the Taiwanese market, citing the optimistic reports by executives of major listed companies, including Cheng Shin Tire, Uni-President and TSMC (Taiwan Semiconductor Manufacturing Corporation), which he visited in the past several days since his arrival on 30 August 2009. He was especially upbeat on tech and domestic-consumption stocks, such as branded notebook PC, NB parts, and IC design.

In Philippines, the stock market closed marginally lower tracking the losses on Wall Street overnight. At the final bell, the benchmark index PSEi fell 0.17% or 4.90 points to 2,803.31, while the All Shares index tumbled 0.20% or 3.65 points to 1,790.02.

In India, the key benchmark indices slumped to hit fresh intraday day in late trade as index heavyweights lost ground. The BSE 30-share Sensex was down 69.13 points or 0.45% to 15,398.33. The S&P CNX Nifty was down 14.80 points or 0.32% to 4,593.55.

On the economic front, the wholesale price index (WPI) declined 0.21% in the year to 22 August 2009 compared to previous week's annual decline of 0.95%. The government revised upwards WPI for the week ended 27 June 2009 to a fall of 1% from an estimated decline of 1.55%.

Elsewhere, Malaysia's Kula Lumpur Composite index went up 0.48% or 5.65 points to 1173.66 while stock markets in Indonesia’s Jakarta Composite index ended the day lower at 2322.25.

In other regional market, European shares edged higher for the first time in four sessions on Thursday, buoyed by gains for miners and chipmaker Infineon Technologies, although losses for drug makers kept a lid on the advance. On a regional level, the U.K. FTSE 100 index was trading higher at 4,825 i.e. 7.34 points or 0.15% high, the German DAX index added 0.3% or 14.76 points at 5,335, and the French CAC-40 index gained 0.2% or 8.58 points at 3,582.