Asian markets tank

Sensex, Sydney, Shanghai, Seoul slip further while Nikkei, Hang Seng follows them

Stock markets in Asian region traded sharply lower for a second straight day on Thursday 29 October 2009, tracking the overnight losses on Wall Street and due to lower commodity prices because of a stronger U.S. dollar.

Reports about China tightening lending controls and concerns that central banks worldwide may end some of their stimulus programs soon also affected sentiment. The underlying mood was cautious as traders awaited the latest reading on U.S GDP growth along with a report on jobless claims for further cues on economic recovery in the world's largest economy.

Meanwhile, the International Monetary Fund raised Asia's economic outlook saying that the region is rapidly rebounding from the depth of the global crisis. It now predicts Asia's gross domestic product or GDP to grow 2.8% this year and by 5.8% next year. In May, the IMF said Asian growth will decelerate to 1.3% in 2009 before rebounding to 4.3% in 2010.

On Wall Street, stocks accelerated and closed significantly lower as the dollar strengthened. The major indices tripped on technical levels, building on selling that began after new-home sales and mortgage applications fell. Metals, energy and tech stocks were among those feeling the brunt of risk aversion, with the Nasdaq faring the worst of the major averages, down 56.48 points, or 2.7%, at 2059.61.

The Dow Jones Industrial Average fell 119.48 points, or 1.2%, to 9762.69, while the S&P 500 lost 20.78 points, or 2%, to 1042.63, a level that would make it negative for the month of October.

In the commodity market, crude oil fell for a second day in New York after an increase in U.S. crude and gasoline inventories raised concern fuel demand has yet to recover.

Crude oil for December delivery fell as much as 43 cents, or 0.6%, to $77.03 a barrel, and traded at $77.36 at 4:08 p.m. Singapore time on the New York Mercantile Exchange. Yesterday, the contract dropped $2.09, or 2.6%, to $77.46, the lowest settlement since 14 October 2009.

Brent crude oil for December settlement fell as much as 29 cents, or 0.4%, to $75.57 a barrel on the London-based ICE Futures Europe exchange, and traded at $75.87 at 4:09 p.m. Singapore time. Prices dropped $2.06, or 2.6%, to end the session at $75.86 a barrel yesterday.

Gold rose in London, rebounding from a three-week low as a weaker dollar increased the metal’s appeal as an alternative investment and some investors increased holdings to take advantage of the decline. Gold for immediate delivery climbed $6.43, or 0.6%, to $1,034.53 an ounce by 9:26 a.m. local time, erasing a drop to $1,026.60, the lowest price since 6 October 2009. December gold futures rose 0.4% to $1,035 an ounce on the New York Mercantile Exchange’s Comex division.

In the currency market, US dollar and yen extended recent rally as global stocks dive following weakness in US equities overnight.

The Japanese yen strengthened across the board and the US dollar inched higher on Wednesday. The dollar had fallen as much as around one% on the day to 90.93 yen, retreating from a one-month high of 92.33 yen hit on the previous day.

The Hong Kong dollar was trading at HK$ 7.7502 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 to three-week lows on Thursday as players like hedge funds booked profits on long positions built in the past few months, while government bonds jumped on renewed safe-haven inflows. At the local close, the dollar was at $US0.8991, down from yesterday’s close of $US0.9108 and nearly 3.5 cents below a 14-month high of $US0.9330 struck last week.

In Wellington trade, the New Zealand dollar fell sharply today following the Reserve Bank of New Zealand's calming statements over the official cash rate and traders' decreased risk appetite. The NZ dollar plummeted to US71.74c by 5pm today, its lowest in three weeks.

The South Korean won ended at 1,196 won against the greenback, down 0.6 won from Wednesday's close of 1195.40 won.

The Taiwan dollar weakened against the greenback. The Taiwan dollar was trading lower against the US dollar at NT$ 32.5800, 0.0860 down from Thursday’s close of NT$32.4940.

In the equity market, Asian markets ended with deep losses after large declines on Wall Street sapped investors' risk appetite. Commodity and shipping stocks were hit the worst as investors sold down cyclical sectors, while NEC Electronics led a slump in Tokyo after a downbeat earnings report.

In Japan, key Nikkei stock index plunged to close below 10,000 for the first time in three weeks, dragged down by a stronger yen and sharp losses in Wall Street. The benchmark Nikkei-225 index shed 183.95 points, or 1.83%, from Wednesday to 9,891.10. The broader Topix index of all First Section issues on the Tokyo Stock Exchange was down 6.54 points, or 0.74%, to 882.26.

In Mainland China, stock index dropped weighed down by banking stocks amid fears over a possible exit from the government's relatively loose monetary policy. Banks, whose earnings performance is sensitive to monetary policy changes, moved lower. After a series of strong economic data released in mid-October, including gross domestic product growth of 8.9% in the third quarter, Chinese officials are now saying China's economic growth is likely to speed up this quarter.

The benchmark Shanghai Composite Index, which covers both A shares and B shares on the Shanghai Stock Exchange, shrank 2.34% or 70.86 points to close at 2,960.47 points after fluctuating between 2,993.43 and 2,952.01 points. The Shenzhen Component Index on the smaller Shenzhen Stock Exchange declined 2.5% or 312.17 points to 12,193.16 points, after touching an intraday low of 12174.12 points.

On the economic front, the bad loan ratio of commercial banks in China dropped to 1.66% at the end of September from 2.42% at the start of the year, the country's banking regulator said on Thursday.

The total value of non-performing loans (NPLs) stood at about 504.5 trillion yuan ($74 billion) at the end of September, down 55.8 billion yuan from the start of the year, the China Banking Regulatory Commission said

China's central government had invested 717 billion yuan (105 billion U.S. dollars) in major public projects as of the end of August, said the State Council, the Cabinet. The figure accounted for 79% of the 908 billion yuan of total investment in 2009, said Zhang Ping, minister in charge of the National Development and Reform Commission (NDRC). The 717 billion investment was mainly allocated to livelihood programs including low-income housing projects, infrastructure in rural areas, health and education programs, energy saving and emission reduction projects, and post-disaster reconstruction, according to the report.

In Hong Kong, stocks fell on Thursday. The benchmark Hang Seng Index opened 471 points lower at 21,290. After touching the intraday low of 21,134.33 points, the blue-chip Hang Seng Index fell 496.59 points or 2.28% to close at 21,264.99. The Hang Seng China Enterprise Index, which tracks the overall performance of 43 Chinese mainland state-owned enterprises on the Hong Kong Stock Exchange, slid 364.51 points or 2.84% to 12,466.67 points.

In Australia, equities slipped lower for a fourth consecutive session today as bears firmly dominated the proceedings in the global market. The benchmark S&P/ASX200 index was down 110.4 points, or 2.36 per cent, at 4574.7 points, while the broader All Ordinaries index had fallen 112.1 points, or 2.39 per cent, to 4575.2 points.

In New Zealand, stock market ended Thursday on a weak note. The New Zealand share market tumbled in early trading, following a broad sell-off in stocks in the United States after weak data on US new home sales heightened concerns about the pace of the economic recovery. The domestic market trickled down in line with the Asian markets that tumbled since early hours trailing the extremely dreary day in the United States overnight. The NZX50 fell 0.22% or 7.16 points to 3195.62. The NZX 15 lost 0.01% or 0.70 points to close at 5812.62.


In South Korea, stocks finished lower as foreign investors dumped shares on worries over the U.S. economic recovery. The benchmark Korea Composite Stock Price Index (KOSPI) sank 23.86 points to 1,585.85, falling below the 1600-point mark for the first time since 7 October 2009.

In Philippines, the stock market continued to slide downward as general weakness on Wall Street pushed investors towards further selling. At the final bell, the benchmark index PSEi lost 1.57% or 45.88 points to 2,862.33, while the All Shares index fell 1.50% or 27.62 points to 1,806.32.

In India, volatility was the order of the day in the second half of the trading session as the market lost ground after a strong intraday rebound. The BSE 30-share Sensex was down 230.77 points or 1.42% to 16,052.72. The Sensex fell 19.40 points at the day's high of 16,264.09 in mid-afternoon trade. The Sensex fell 289.66 points at the day's low of 15993.83 in early trade. The S&P CNX Nifty was down 75.60 points or 1.57% to 4,750.55.

On the economic front, inflation based on the wholesale price index (WPI) rose 1.51% in the year through 17 October 2009, higher than previous week's annual rise of 1.21%, data released by the government today showed. Within the WPI, the food articles index rose 12.85%. The government revised upwards inflation for the year through 22 August 2009 to rise of 0.17% from an estimated fall of 0.21%.

Elsewhere, Malaysia's Kula Lumpur Composite index was trading lower at 1241.75 while stock markets in Indonesia’s Jakarta Composite index ended the day lower at 2344.03. Singapore’s Straits Times Index ended lower at 2,632.31.

In other regional market, European shares were in a tight range on Thursday, as oil and gas firms offset gains from the financial sector amid a deluge of corporate earnings. On a regional basis, the U.K. FTSE 100 index declined 0.1% to 5,076.77, the German DAX index lost 0.1% to 5,490.32 and the French CAC-40 index climbed 0.1% to 3,665.63.