Asian markets take a hop on Tuesday

Sydney surge after RBA's rate cut while Sensex, NZX 50, Nikkei follows with gains

Stock market in Asian region registered rose for the first time in four days on Tuesday 6 October 2009, after US service industries returned to growth following 11 months of contraction and commodity prices gained.

On Wall Street, stock markets broke out of a two-week funk Monday after the Institute of Supply Management said its services index rose to 50.9 in September from 48.4 in August. A reading above 50 shows activity is expanding. The index hadn’t signaled growth since August of last year

U.S. stocks were also boosted by a Goldman Sachs report that talked up the prospects of banks as investors scrounged for any positive news after being jolted by last week’s dire report on climbing unemployment. The Dow rose 112.08, or 1.2%, to 9,599.75, its first gain in four days. The broader Standard & Poor’s 500 index rose 15.25, or 1.5%, to 1,040.46, while the Nasdaq composite index rose 20.04, or 1%, to 2,068.15.

In the commodity market, crude oil rose for a second day in New York as the dollar’s decline bolstered the appeal of commodities as a hedge against inflation.

Crude oil for November delivery rose as much as 74 cents, or 1.1%, to $71.15 a barrel in electronic trading on the New York Mercantile Exchange. The contract was at $70.80 a barrel at 3 p.m. Singapore time.

Brent crude oil for November settlement rose as much as 63 cents, or 0.9%, to $68.67 a barrel on the London-based ICE Futures Europe exchange. It traded at $68.40 a barrel at 3:01 p.m. Singapore time.

Gold, trading near a record in London, may advance for a third day as a tumbling dollar spurs demand for the precious metal as an alternative investment. Immediate-delivery bullion rose as much as $4.35, or 0.4%, to $1,021.65 an ounce, the highest price since 17 September 2009, and was at $1,019.25 by 9:23 a.m. local time. December gold futures were 0.2% higher at $1,019.70 an ounce on the New York Mercantile Exchange’s Comex division.

In the currency market, Aussie surged to new 2009 high against dollar after RBA unexpected hikes interest rates from 3.00% to 3.25%. Elsewhere, dollar remains pressured across the board. Aussie's strength is leading other major currencies to rise against the greenback.

The Japanese yen strengthened against major currencies. The Japanese yen was quoted at 88.99 against the greenback, 130.73 against the euro, and 142 against pound.

The Hong Kong dollar was trading at HK$ 7.7501 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 climbed to its highest since August 2008 after the central bank raised borrowing costs, the first interest-rate increase among the Group of 20 nations, boosting demand for the country's assets.

Australia's currency rose as high as 88.66 U.S. cents, the most since 11 August 2008, before trading 1% stronger at 88.64 cents as of 4:12 p.m. in Sydney, from 87.79 cents in New York yesterday. The Australian dollar advanced 0.5 per cent to 79.02 yen. At the local 5 p.m. close, the Aussie dollar was even strong buying 88.75-78 US cents, up from Monday's close of 87.34/39 US cents.

In Wellington trade, the New Zealand dollar rose strongly even though the Reserve Bank of Australia raised its official cash rate to 3.25% from 3%. The NZ dollar was at US72.10c around midnight last night and rose to US73.20c by 8am when other currencies had barely moved. It was US73.35c at 5pm from US72.01c at the same time yesterday.

The South Korean currency closed at 1,170.3 won to the greenback, up 3.4 won from Monday's close, as the local economy was seen to make a fast recovery. The won’s ascent is the highest since 26 September 2008.

The Taiwan dollar strengthened against the greenback. The Taiwan dollar was trading higher against the US dollar at NT$ 32.1520, 0.1030 up from Monday’s close of NT$32.2550.

In the regional equity market, Asian equity markets mostly advanced inspired by solid gains for U.S. stocks, though some markets had slipped off earlier highs or were trading lower.

In Japan, shares market finished the choppy session up, snapping three days of loosing streak lifted by bargain hunting primarily in financials and exporters, but gains were subdued, hurt by concern about the effects of a strong yen on the economic recovery. Recent slide in market brought buying interest from investors seeking bargains. At the closing bell, the Nikkei 225 Stock Average index rose 17.31 points or 0.18%, to 9,691.8, while the broader Topix was up 4.35 points, or 0.5%, to 871.63.

The Japanese finance minister Hirohisa Fujii said on Tuesday that the government has managed to scrape together more than 2.5 trillion yen from the 14.7 trillion yen extra budget for fiscal 2009, approved under the preceding administration, to fund its key polices. The Democratic Party of Japan-led government has targeted salvaging at least 3 trillion yen from the supplementary budget, which was crafted by the previous administration led by the Liberal Democratic Party.

Stock markets in China have been shut since 1 October 2009 for National day and autumn festival celebrations. Trading will resume on 9 October 2009.

In Hong Kong, the stock market buoyed by strong bargain hunting especially in banks and financials and properties after their US peers rallied following a Goldman Sachs upgrade on the bank sector. Major heavyweight materials and energy shares outperformed, benefited from firmer crude oil and metal prices. The Hang Seng Index jumped 382.46 points, or 1.87%, to 20,811.53, while the Hang Seng China Enterprise added 341.06 points, or 2.93%, to 11,986.11.

On the economic front, according to Land Registry figures released yesterday Hong Kong’s luxury home sales rose to 1,351 in September from 500 in August, as Mainland Chinese residents flocked to buy flats in the city.

In Australia, the shares market came off its highs to finish the session meager with gains across most of the sector. Shares of materials and recourses and energy issues led the rally on the back of firmer base metal and crude oil prices, meanwhile gold miners benefited after precious metal prices bounced overnight. Banking shares pared their earlier gains, meanwhile properties and retailers turned lower after the nation's central bank surprised with a quarter-point rate hike.

At the closing bell, the benchmark S&P/ASX200 index spurted 18.30 points, or 0.40%, to 4,591.6, meanwhile the broader All Ordinaries gained 17.90 points, or 0.39%, to 4,597.2.

On the economic front, the Australian Bureau of Statistics reported Tuesday that country posted a seasonally adjusted trade deficit of A$1.524 billion in August. The deficit was a decrease of 15% or A$259 million from the revised July 2009 deficit.

The Reserve Bank of Australia Tuesday raised its cash rate by 25 basis points to 3.25% amid signs the economy is recovering from the global crisis.

In New Zealand, benchmark closed slightly up trailing a fairly decent performance on the Wall Street overnight. The share market moved forward Tuesday after dipping down for two sessions in a row. The Asian markets were struggling to stay in the positive region trying to track the gains in United States, but were inching down through the day. The New Zealand share market followed the overnight lead of offshore markets, opening firmly today.

The NZX50 advanced 0.41% or 12.82 points to 3151.54. The NZX 15 was up 0.12% or 6.73 points to close at 5774.16.

On the economic front, New Zealand business confidence is surging to its highest level for a decade according to a survey by the New Zealand Institute of Economic Research, adding to a string of positive reports. The September survey results provide strong evidence that "the worst of the recession is over and the economy is on the mend" according to NZIER. A net 27 per cent of firms expected business conditions to improve in the year ahead, according to the NZIER survey, up from a net 14% negative in the previous survey. "Firms expect a significant acceleration of activity in the December quarter," NZIER said.

In South Korea, stocks ended lower as the Australian central bank's decision to lift its key interest rate renewed investor concerns that the local central bank could follow suit. The benchmark Korea Composite Stock Price Index (KOSPI) shed 8.46 points to 1,598.44, extending a losing streak to the fourth-day.

In Singapore, stock market spurted in the first trading session with broad based gains across the sector. Shares of top banks, properties and major blue chip companies outperformed on tracking strong cues from triple digit gains in Wall Street overnight and other Asian bourses. Meanwhile companies reliant on overseas sales bounced after US service industries returned to growth following 11 months of contraction. The blue chip Straits Times Index was ended at 2,611.89, rose 28.16 points or 1.09%.

In Taiwan, stock market extended its winning streak in second session, as foreign investors resumed their buying streak, by investing more in financial and technology related stocks. The benchmark Taiex share index extended its winning streak in second straight session by ending the day higher by 98.07 points or 1.32% in a day, closing the day at 7536.05.

In Philippines, recent spree of positive indicators along with exuberance in the Asian equities helped the Philippines equities register impressive gains today. The benchmark index PSEi escalated 2.30% or 64.98 points to 2,884.46, while the All Shares index went up 1.59% or 28.48 points to 1,818.89.

On the economic front, consumer prices rose at a faster pace of 0.7% in September driven mainly by spikes in food costs. Last month's inflation was higher than August's 0.1%, but lower than the 11.8% registered in September 2008. The September inflation fell within the central bank's forecast of 0.0% to 0.9% for the month. Vegetables and fruits alone soared by 2.1% from 0.7% month-on-month, which the government attributed to low supply amid "excessive rains being experienced since July." Excluding volatile items such as food and fuel prices, core inflation slowed to 2.8% in September from 2.9% in August.

In India, key benchmark indices logged decent gains in what was a highly choppy trading session. Firm global stocks and expectations of strong Q2 September 2009 results aided a strong intraday rebound.

The BSE 30-share Sensex was 92.13 points or 0.55% to 16,958.54. The Sensex opened 12.97 points higher at 16,879.38. The barometer index rose 122.15 points at the day's high of 16,988.56 in late trade. The Sensex lost 244.36 points at the day's low of 16,622.05 in early afternoon trade. The S&P CNX Nifty was up 24.20 points or 0.48% to 5,027.40. Nifty recovered from day's low of 4921.05

Elsewhere, Malaysia's Kula Lumpur Composite index went down 0.31% or 3.72 points to 1212.73 while stock markets in Indonesia’s Jakarta Composite index ended the day higher at 2528.15.

In other regional market, European shares rose sharply on Tuesday, up for the second straight session, as the banking sector scored a broker upgrade and as miners jumped on higher gold prices. At the regional level, the German DAX index rose 1.6% to 5,594.51, the U.K.’s FTSE 100 index climbed 1.4% to 5,096.67 and the French CAC-40 index advanced 1.3% to 3,721.30.