Asian markets tanks deeper on Thursday

Sensex, Shanghai, Sydney, Seoul lead losses while Nikkei, Hang Seng, NZX 50 follows them

Stock market in Asia finished lower on Thursday, 22 October 2009, after China’s impressive GDP figures ignited speculation that economy may be close to a point where stimulus is soon removed from the system, taking US dollar back from the brink of its lowest levels since the beginning of August 2008.

On Wall Street, stocks sold off after Wall Street learned that Washington would restrict executive pay at companies receiving bailout funds and Wells Fargo was downgraded. The Dow Jones Industrial Average fell 92.12 points, or 0.9%, to 9949.36, while the S&P 500 shed 9.66 points, or 0.9%, to 1081.40. The Nasdaq gave up 12.74 points, or 0.6%, to 2150.73.

In the commodity market, crude oil fell below $81 a barrel as the dollar strengthened against the euro, reducing demand for commodities as an alternative investment.

Crude oil for December delivery fell as much as $1.37, or 1.7%, to $80 a barrel in electronic trading on the New York Mercantile Exchange. It was at $80.26 a barrel at 10:09 a.m. London time.

Brent crude oil for December settlement fell as much as $1.28, or 1.6%, to $78.41 a barrel on the London-based ICE Futures Europe exchange. It was at $78.67 a barrel at 10:12 a.m. London time.

Gold declined as a rebounding dollar eroded the appeal of the metal as an alternative investment and as some investors sold bullion following its recent rally. Immediate-delivery bullion lost $5.18, or 0.5%, to $1,053.82 in London as of 9:46 a.m. local time. December gold futures slipped $10.30, or 1%, to $1,054.20 an ounce on the New York Mercantile Exchange’s Comex division by 4:45 a.m. local time.

In the currency market, after diving to a new 2009 low overnight, dollar recovers in Asian markets today on the back of disappointment in China GDP and retreat in Asian stocks.

The Japanese yen depreciated to around 91.47 against the dollar after 3 p.m. Thursday, recovering the level last seen 24 September 2009. The Japanese currency was 0.78 yen weaker against the greenback than at 5 p.m. Wednesday.

The Hong Kong dollar was trading at HK$ 7.7500 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 flat as Chinese economic data failed to lift investor appetite for growth assets such as equities and commodity-driven currencies. At the local close, the dollar was trading at $US0.9226, slightly up from Wednesday’s close of $US0.9224. During the day, the unit moved between $US0.9226 and $US0.9299.

In Wellington trades, the New Zealand dollar tumbled against the greenback early today as it retreated from yesterday's 15-month high. The kiwi was buying US74.78c when last seen, having fallen sharply from the US75.50c level around midnight, before making a small recovery. Yesterday morning the NZ dollar had peaked at US75.75c.

The South Korean won ended at 1,190 won against the greenback, down 11 won from Wednesday's close, as foreign investors cut their holdings of local stocks.

The Taiwan dollar weakened against the greenback. The Taiwan dollar was trading lower against the US dollar at NT$ 32.4010, 0.0420 down from Wednesday’s close of NT$32.3590.

In the Asian equity market, share markets closed lower after a night of weakness on Wall Street, and were weighed further by data showing China's economy grew at a slightly slower than expected pace in the third quarter.

In Japan, stock market lost further, following overnight weakness on Wall Street that sparked broad based selling while investors await the Japanese earning reports season to get into full swing next week. The Nikkei 225 Stock Average lost 66.22 points, or 0.64%, to 10,267.17. The Topix index of all the Tokyo Stock Exchange First Section issues fell 5.10 point, or 0.56%, to 908.60.

In Mainland China, equities closed slightly down despite the better-than-expected GDP data. The closing hours of the session saw the bearish momentum in the broad markets sweeping China as well, making the index give away its moderate gains earlier in the day.

The benchmark Shanghai Composite Index, which covers both A shares and B shares on the Shanghai Stock Exchange, decreased 0.62% or 19.18 points to close at 3,051.41 points after fluctuating between 3,080.66 and 3,045.03 points.

On the economic front, China's Shanghai Composite was down 0.62%, even though the data showed that steady upturn trend of China’s national economy further strengthened. China's GDP grew 8.9% in the third quarter, the National Bureau of Statistics said today. Figures for the first quarter this year were 6.1%, with 7.9% for the second quarter. GDP growth in the first three quarters was 7.7%, up from 7.1% growth in the first half this year.

China's cabinet said yesterday that it would maintain stimulus measures even after the economy-exceeded expectations for the first nine months of the year. The State Council also signaled that inflation concern would be an increasing focus of its policy, as minute evidence of rising inflationary pressures is seen in China. The month-on-month changes of consumer price and producers’ price reversed from decreasing to increasing while the year-on-year decrease narrowed. China’s consumer price index declined by 0.8 % in September, from a fall of 1.2 % in August, while the producer price index fell by 7 % in September, from 7.9 % in August.

The growth rate of industrial production increased on a quarterly basis and the decrease rate of profits made by industrial enterprises slowed down. In the first three quarters of this year, the total value added of the industrial enterprises above designated size was up 8.7 % year-on-year, or 6.5 percentage points lower than that in the same period of last year. Of this total, the growth in the first quarter was 5.1 %, the second quarter 9.1 %, and that in the third quarter was 12.4 %.

In Hong Kong, stocks trimmed losses to close down, with telecom and property shares falling as the market turned cautious on concern about inflation, despite economic data from China.

The Hang Seng Index, the benchmark, opened 80 points lower at 22,237. After touching the intraday low of 22,002.79 points, the blue-chip Hang Seng Index fell 107.59 points or 0.48% to close at 22,210.52. The Hang Seng China Enterprise Index, which tracks the overall performance of 43 Chinese mainland state-owned enterprises on the Hong Kong Stock Exchange, decreased 41.66 points or 0.32% to 12,959.93 points.

In Australia, stock market in Australia tanked further, after investors took profits in afternoon trade when Chinese third quarter GDP data failed to impress. China’s economy expanded at the fastest pace in a year as stimulus spending and record lending growth helped the nation lead the world out of recession. Gross domestic product rose 8.9% in the third quarter from a year earlier, the statistics bureau said. The benchmark S&P/ASX200 declined by 25.8 points or 0.5% ending the day at 4,812.80. The broader All Ordinaries dumped 27.4 points or 0.6% closing at 4,818.80.

In New Zealand, stocks fell for a second day, extending a drop from a 14-month high as risky assets came under pressure in Asia. The New Zealand markets were stirred after Contact Energy avoided giving clear guidance on the outlook for earnings and investors fretted about Pike River Coal’s need for more cash. A broad decline in commodities and weakness in Kiwi also led to some selling pressure. The NZX 50 Index fell 16.52, or 0.5%, to 3201.69. The NZX 15 index, comprising of the 15 top stocks fell by a much-pronounced 0.84% to 5802.28 points.

In South Korea, stocks closed lower, as investors unloaded tech blue chips on concerns over their earnings outlook. The benchmark Korea Composite Stock Price Index (KOSPI) declined 23.53 points to 1,630.33. Foreigners became net sellers of Seoul stocks on the main bourse for the first time in eight sessions. They unloaded a net 122.6 billion won worth of local stocks.

In Taiwan, stock market extended losses for the second straight session, stepping in Wall Street shoes, as construction and cement sector drove the losses while tourism sector stood aside with the gains. The benchmark Taiex share index sunk deeper in to losses as it finished lower by 93.57 points or 1.21% in a day, closing the day at 7607.93.

In Philippines, the stock market closed lower as investor's booked profit following the losses on Wall Street overnight and a weak momentum in the Asian equities. Moreover, investors remained cautious due to the possible negative effects of the typhoon the country has suffered from recently. Recent natural disasters will cut Philippine fourth-quarter economic growth. At the final bell, the benchmark index PSEi fell 1.06% or 31.18 points to 2,888.72, while the All Shares index went down 0.97% or 18.03 points to 1,823.90.

In India, the key benchmark indices cut losses after hitting fresh intraday day low in late trade. Weak global markets and rise in headline inflation to above 1% mark, weighed on investor’s sentiment.

The BSE 30-share Sensex was down 219.43 points or 1.29% to 16,789.74. The Sensex rose 22.37 points at the day's high of 17,031.54 in early trade. The barometer index fell 287.91 points at the day's low of 16,721.26 in late trade. The S&P CNX Nifty was down 75 points or 1.48% to 4,988.60.

On the economic front, inflation based on the wholesale price index (WPI) rose 1.21% in the year through 10 October 2009, higher than previous week's annual rise of 0.92%, date released by the government today showed. Within the WPI, the food articles index rose 13.34%. The government revised upwards inflation for the year through 27 August 2009 to a much smaller fall of 0.21% from an estimated 0.95% decline.

Elsewhere, Malaysia's Kula Lumpur Composite index was trading flat at 1260.02 while stock markets in Indonesia’s Jakarta Composite index ended the day lower at 2433.18. Singapore’s Straits Times Index ended lower at 2,681.97.

In other regional market, European shares fell sharply on Thursday after a raft of updates on sales and profit trends from companies including Ericsson, and after data indicated growth in China accelerated in the third quarter. On a regional level, the German DAX index lost 1.53%or 89.02 points to 5,744, the French CAC-40 index dropped 1.55% or 59.85 points to 3,813 and the U.K. FTSE 100 index fell 1.24% to 5,192.