Asian markets turn timid on Tuesday

Sensex, Seoul, Sydney, Hang Seng finish lower while Shanghai extend gains

Stock market in Asian region finished mostly lower on Tuesday, 3 November 2009, on concerns stimulus measures if withdrawn prematurely may undermine a global economic recovery. After a fairly positive opening, most of the markets in the region drifted lower as Reserve Bank of Australia hiked the rates, the participants choosing to tread cautiously ahead of interest rates announcements from the U.S, U. K and Euro zone this week.

On Wall Street, the major stock averages recovered after another volatile day Monday as the market goes through what one observer calls a transition period. The Dow Jones Industrial Average gained 76.71 points, or 0.8%, to 9789.44, while the S&P 500 added 6.69 points, or 0.7%, to 1,042.88. The Nasdaq edged up 4.09 points, or 0.2%, to 2049.20.

Stocks advanced early after a trio of positive surprises economic reports, but gave up those gains by midday only to recover with a buying spree in the final hour.

On the economic front, the Institute for Supply Management’s index on manufacturing rose to 55.7 in October from 52.6, topping expectations for 53, marking the third consecutive monthly gain and the highest rate of growth since April 2006. The rise was driven by significant gains in production and employment. At the same time, pending home sales offered a big upside surprise, rising 6.1% while the construction spending rose by 0.8%.

In the commodity market, crude oil was little changed in New York after rising yesterday as data showing global manufacturing expanded signaled that fuel demand may increase.

Crude oil for December delivery was at $77.97 a barrel, down 16 cents, on the New York Mercantile Exchange at 3:58 p.m. Singapore time. The contract yesterday gained $1.13, or 1.5%, to settle at $78.13 a barrel.

Brent crude for December settlement was at $76.43 a barrel, down 12 cents, on the London-based ICE Futures Europe exchange at 3:59 p.m. Singapore time. The contract yesterday climbed $1.35, or 1.8%, to $76.55 a barrel.

Gold for immediate delivery rose after the International Monetary Fund sold 200 metric tons of gold to the Reserve Bank of India for about $6.7 billion, its first sale of the precious metal in nine years. Gold for immediate delivery gained to $1,061.60 an ounce at 3:42 p.m. in Singapore and was about $9 below its record $1,070.80 an ounce reached 14 October.

In the currency market, Australian dollar weakens mildly after the expected RBA hike 0.25% to 3.50%. The bank noted in the accompany statement that the "adjustments at the October and November meetings will work to increase the sustainability of growth in economic activity and keep inflation consistent with the target over the years ahead," which is taken a signal that it will pause for some time.
The Japanese yen was quoted at 89.98 per dollar.

The Hong Kong dollar was trading at HK$ 7.7504 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 fell after the Reserve Bank of Australia raised interest rates by an expected 25 basis points but sounded less hawkish than some had bet on. At the today close, the dollar was trading at $US0.9032, after slipping as low as $US0.9007 in the wake of the rates decision, off an intra-day high of $US0.9092 as investors sold on the fact. Yesterday the dollar closed at $US0.9047.

In Wellington trade, the New Zealand dollar ended a mixed session with a muted reaction to news today that the Reserve Bank of Australia raised its cash rate by 25 basis points to 3.5%. The NZ dollar had a bumpy ride on Monday night, rising to US72.65c and then plunging to US71.45c by 8am. It consolidated for most of the session here ahead of the Australian rate decision at 4.30pm.

The South Korean won ended at 1,182 won to the U.S. dollar, up 0.5 percent from Monday's close, on growing risk appetites for the South Korean won.

The Taiwan dollar weakened against the greenback. The Taiwan dollar was trading lower against the US dollar at NT$ 32.5750, 0.0220 down from Monday’s close of NT$32.5530.

In the equity market, Asian share markets closed mixed in subdued trade as a holiday in Japan kept bourses range-bound, with gold stocks leading the way in Australia after gains for the yellow metal.

In Japan, stock markets were closed on the account of bank holiday.

In Mainland China, share market surged, extending winning streak for third consecutive days, with financial and commodities stocks led the gainers as bullish manufacturing data increased the risk appetite. China property issue tumbled amid concerns with respect to asset quality in the banks. The Shanghai Composite Index, measuring A shares and B shares on the Shanghai Stock Exchange, surged 37.58 points, or 1.22%, to 3,114.23, while the CSI 300 Index, measuring exchanges in Shanghai and Shenzhen, rose 1.26%, to 3,435.42.

In Hong Kong, the stock market tumbled, after climbing as much as 0.3% as market participants indulging into profit taking across the major heavyweights. Property developers stocks weighed the most on concern the government would act to stabilize the property market. Banks and financials ran out of steam after US Federal Reserve official’s warning about banks’ loan losses. Export related stocks were firmer as better than-estimated manufacturing figures in the U.S.

At the closing bell, the Hang Seng Index declined 380.13 points, or 1.76%, to 21,240.06, meanwhile the Hang Seng China Enterprise, which tracks the overall performance of 43 mainland Chinese state-owned enterprises on the Hong Kong Stock Exchange, plunged 241.24 points, or 1.89%, to 12,500.64.

In Australia, the share market benchmark finished the session lower, after trading both side of gain line with QBE Insurance dragged the most in financials, while profit taking continued to hit the energy sector despite crude oil prices gained momentum overnight.

At the closing bell, the benchmark S&P/ASX200 index tumbled 8.9 points, or 0.2%, to 4,531.50, while the broader All Ordinaries retreated 6.30 points, or 0.14%, to 4,540.

On the economic front, the Reserve Bank of Australia has lifted its key interest rate for a second month in a row as it attempts to keep economy on track for sustained growth. Today's widely tipped 25-basis-point increase raises the central bank's cash rate to 3.5%, marking the first back-to-back monthly increase by the RBA board since March last year when rates peaked at 7.25%.

The quarter-point increase will add about $45 to the average monthly payment for a typical 25-year, $300,000 mortgage if it is passed on in full by commercial banks.

In New Zealand, stocks ended on a negative note although the stock market made small early gains early today following yesterday's 1% fall. The share market registered the second day of decline in a row Tuesday. The early gain came after a fairly positive session in the United States overnight. Although Wall Street ended higher Monday over some positive economic reports, Asian stock markets are exhibiting a mixed trend on Tuesday. The NZX50 declined 0.78% or 24.74 points to 3158.99. The NZX 15 lost 0.77% or 43.90 points to close at 5735.01.

In South Korea, stocks finished lower as they underwent a correction on recovery jitters and looming exit strategies. The benchmark Korea Composite Stock Price Index (KOSPI) declined 9.17 points to end at 1,549.92, taking its losing streak to a sixth consecutive session.

In Singapore, stock market finished the session lower after fluctuating in and out of boundary line after Prime Minister Lee Hsien Loong said today Singapore’s export-dependent economy has bottomed out. The market has turned from buying on dips to selling on rallies. Financials ran out of steam after US Federal Reserve official’s warning about banks’ loan losses. The blue chip Straits Times Index was ended the session at 2,621.55, erased 23.88 points or 0.9%.

In Taiwan, stock markets continued to witness range bound movement as stocks continued to move around the one month low, with construction sector leading the losers. The benchmark Taiex share index inched down further for sixth session as it lost 12.25 points or 0.17% in a day, closing at 7322.93, another lowest closing since 28 September 2009 when market finished day at 7284.61.

On the economic front, visitor arrivals to Taiwan in the first nine months of this year totaled more than 3.16 million, up 11.54% from the same period last year. According to the Tourism Bureau the figures contradicted forecasts that 2009 would be a bleak year for the tourism industry in light of the global economic downturn and the influenza A(H1N1) outbreak, predicting that visitor arrivals for the whole year are likely to reach 4.1 million.

In Philippines, the stock market closed flat, despite of positive cues from overnight US markets as most of the sectors failed to record any gains except the mining & oil index and industrial stocks. Investors remained cautious ahead of corporate earnings results, results of a central bank policy meeting, inflation data for October, which brought the composite index in negative territory. Mining & oil index mounted nearly 6%. The benchmark index PSEi lost 0.26 points to 2,908.24, while the All shares index fell 0.08% or 1.57 points to 1,826.80.

In India, stocks collapsed like a pack of cards in the last hour of trade, with market extending losses for a sixth trading day, on intense selling pressure. Fears other audit in other frontline companies following reports of special audit in index heavyweight's Reliance Industries' books of accounts triggered a sell-off on the bourses. Weak European markets, subdued regional markets and lower index futures dampened investor sentiment further.

The BSE 30-share Sensex slumped 491.34 points or 3.09% to 15,404.94. The S&P CNX Nifty slipped 147.80 points or 3.14% to 4563.90.

Elsewhere, Malaysia's Kula Lumpur Composite index finished slightly higher at 1242.32 while stock markets in Indonesia’s Jakarta Composite index ended the day down at 2334.11.

In other regional market, European shares fell after Australia kicked off a busy week for central bank interest-rate decisions with its second hike in two months, while asset-protection scheme updates from two British lenders placed the focus firmly on the banking sector. On a regional level, the U.K. FTSE 100 index lost 2.1% to 4999, the German DAX index declined 2% to 5,322 and the French CAC-40 index fell 2.3% to 3,557.