Asian markets edge higher

Sensex, Hang Seng led regional gains while Shanghai, Seoul follows

Stock market in Asian region finished higher on Wednesday, 23 December 2009, as investors turned cautious mood ahead of Christmas weekend. Most of the regional markets extended gains taking cues from Wall Street where the major averages ended with modest gains on positive home sales data. Continuing strength in the dollar and rise in oil prices after OPEC decided to keep the production quotas unchanged also lifted sentiment.

On Wall Street, stocks finished higher for the third day in a row as data showing a surge in existing-home sales offset a downward revision in third-quarter GDP. The Dow Jones Industrial Average rose 51 points, or 0.5%, to 10,465. The S&P 500 added 4 points, or 0.4%, to 1118, while the Nasdaq improved by 15 points, or 0.7%, to 2253.

In the commodity market, crude oil held steady above $74 a barrel in New York before a U.S. Energy Department report likely to show crude stockpiles fell last week as temperatures dropped.

Crude oil for February delivery rose as much as 39 cents, or 0.5%, to $74.79 a barrel in electronic trading on the New York Mercantile Exchange. The contract was at $74.76 as of 9:19 a.m. London time. Futures closed yesterday at $74.40, the highest settlement since 4 December 2009.

Brent crude oil for February settlement traded up 44 cents at $73.78 a barrel on the London-based ICE Futures Europe exchange at 9:23 a.m. local time. The contract earlier rose as much as 0.7% to $73.94. Yesterday, Brent advanced 47 cents, or 0.6%, to settle at $73.46 a barrel.

Gold, little changed in London today, may decline for a third day as gains in the dollar prompt investors to sell the metal before year’s end. Gold for immediate delivery added $2.07, or 0.2 percent, to $1,086.07 an ounce at 9:10 a.m. local time. Gold for February delivery in New York was 0.02 percent higher at $1,086.90 an ounce.

In the currency market, the US dollar remains firm in Asia today after overnight's rally on better than expected existing home sales data.

The Japanese yen was quoted at 91.82 yen per dollar, from yesterday’s close of 91.41 yen.

The Hong Kong dollar was trading at HK$ 7.7540 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 was pinned near 11-week lows by the US dollar, which found strength in upbeat housing data and a steepening yield curve. At the local close, the dollar was trading at $US0.8760, from $US0.8792 on Tuesday and 93 US cents earlier in the month.

In Wellington trade, the New Zealand dollar fell on news the economy is crawling its way out of recession. The 0.2% rise in gross domestic product in the September quarter was less than the 0.3% rise the market was expecting and the 0.4% rise the Reserve Bank of New Zealand predicted in its December monetary policy statement. The NZ dollar fell to US69.80c by early afternoon, its lowest level since mid September, from around US70.20c before the data.

The South Korean won closed at 1,183.6 won to the U.S. dollar, down 3.7 won from Tuesday's close, as offshore investors increased their holding of the greenback.

The Taiwan dollar strengthened against the greenback. The Taiwan dollar was trading higher against the US dollar at NT$ 32.3500, 0.0050 up from Tuesday’s close of NT$32.3550.

In equities, Asian share markets were mostly higher in holiday-thinned trade Wednesday, with Australian coal stocks shining on corporate action and technology firms advancing across the region.

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

In Mainland China, the share market surged on bottom fishing after benchmark Shanghai Composite hit at its lowest in seven weeks yesterday. Materials, industrials, and energy stocks rallied today on bargain hunting amid expectations that global economic recovery would accelerate and continue into next year spurring raw materials demand. Telecommunication sector buoyed up on strong subscriber growth. Steelmakers benefited on hopes of they will raise steel prices due to raising iron ore prices and growing demand.

At the closing bell, the Shanghai Composite Index, measuring A shares and B shares on the Shanghai Stock Exchange, advanced 23.26 points, or 0.76%, to 3,073.77, meanwhile the Shenzhen Component Index on the smaller Shenzhen Stock Exchange grew 1.31% or 165.78 points, to 12,813.29. The CSI 300 Index, measuring exchanges in Shanghai and Shenzhen, added 0.94%, to 3,336.48.

On the economic front, China’s domestic demand will continue to grow next year, with fixed asset investment up 25% from a year earlier and retail sales up 18.5%, the State Information Center (SIC) forecast in a report issued Tuesday. However, domestic consumption may not grow as quickly as this year considering the inflationary expectations, the SIC stated. China's Ministry of Commerce said Tuesday that annual overseas direct investment (ODI) from non-financial sectors is expected to top $42 billion in 2009. Non-financial ODI in the first 9 months stood at $32.87 billion, up 0.5% year on year.

In Hong Kong, the share market reversed morning losses to finish the session higher, with gains in export related stocks amid signs the health of US economy is recovering on positive home sales data. Steelmakers benefited on hopes of they will raise steel prices due to raising iron ore prices and growing demand. Banking stocks bounced; led by HSBC Holdings after BNP Paribas delivered upbeat comment. Materials and recourses advanced amid sign of increasing iron ore demand from steelmakers, spurred by the government’s $586 billion stimulus package.

At the closing bell, the Hang Seng Index rebounded 236.70 points, or 1.12%, to 21,328.74, meanwhile the Hang Seng China Enterprise, which tracks the overall performance of 43 mainland Chinese state-owned enterprises on the Hong Kong Stock Exchange, climbed 178.80 points, or 1.45%, to 12,528.66.

In Australia, the market finished the session higher with benchmark indices All Ordinaries hits three week closing high, as banking stocks soared and takeover activity in the materials sector boosted the miners. The gains were broad-based, with all sectors closed above the gains line. At the closing bell, the benchmark S&P/ASX200 index surged 35.10 points, or 0.75%, to 4,739.30, meanwhile the broader All Ordinaries rose 31.70 points, or 0.67%, to 4,756.1.

In New Zealand, the NZX50 increased by 0.9% or 30.38 points to 3209.56. The NZX 15 rose 1.01% or 58.29 points to close at 5837.43.

In South Korea, stocks finished higher after range-bound trading as foreign investors continued buying for a second session. The benchmark Korea Composite Stock Price Index (KOSPI) managed to add 5.81 points to 1,661.35 after moving in a narrow range.

In Singapore, the share hold up early gains throughout the session, finishing up in choppy trade, inspired from positive Wall Street overnight and firmer other Asian bourses. Gains in the Straits Times Index were drove by banks, properties and other blue chips amid signs the US economy is improving after sales of existing US homes in November rose to the highest level in almost three years. At the closing bell, the blue chip Straits Times Index was at 2,841.56, added 17.74 points or 0.63%.

On the economic front, Singapore's Department of Statistics data showed that country’s consumer price index for November increased by 0.4% from October due to higher costs of recreation & others. On year on year, CPI fell 0.2% in November, after falling 0.8% in October, mainly due to lower housing costs.

Singapore's central bank has forecast inflation for 2010 in a range of 2.5% to 3.5%, versus an earlier projection of 1-2%, citing an increase in property tax that will take effect next year. The government has forecast 2010 GDP to grow between 3% and 5%, and has maintained its 2009 GDP forecast for a contraction between 2.5 and 2%.

In Taiwan, stock market in Taiwan advanced for another day, touching a new 1- ½ years high, as the regional stocks followed the gains on Wall Street. However, the gains were limited as the talk between Taiwan and China on Taxation issue failed to bring positive developments.

Both the countries decided not to sign the agreement for double-taxation avoidance and taxation cooperation (or taxation agreement, for short) during the on-going cross-Taiwan Strait talk in Taichung, citing technical problems. In a press conference held hastily, Lee Sush-der, finance minister, attributed the shelving of the agreement to differences over tax-revenue allocation, the ceiling of withholding-tax rate, and income definition, refusing to confirm the reported cause of sovereignty issue, however.

The benchmark Taiex share index attained a new 1-½ year high after extending gains for the fourth flat session, ending the day higher by 45.50 points or 0.58% at 7901, the highest closing since 19 June 2008 when market finished the day at 8047.74.

On the economic front, Taiwan’s unemployment rate declined for a second month as employers hired more people amid signs the economy is emerging from a recession. The seasonally adjusted rate fell to 5.98% last month from 6.04% in October.

According to the statistics bureau, the increased hiring comes as exports, which account for more than two-thirds of Taiwan's economy, climbed for the first time in 15 months in November. The number of unemployed people declined to 657,000 in November from 661,000 in October. Without adjusting for seasonal factors, Taiwan's jobless rate fell to 5.86% from 5.96% in October.

In Philippines, equities garnered steady gains despite not so positive economic news as investors preferred to follow the modest up tick in the Asian equities ahead of a long weekend. The benchmark index PSEi escalated 0.27% or 8.17 points to 3,024.33, while the All Shares index mounted 0.66% or 12.52 points to 1,901.45.

In India, buying frenzy continued in late trade as key benchmark indices spurted on comments by Finance Minister Pranab Mukherjee that the economy can grow 7.75% in the fiscal year that ends in March 2010 (FY 2010). Higher advance tax payment by India Inc and firm global stocks, also underpinned sentiment. The BSE Sensex was up 539.11 points or 3.23% to 17231.11. The S&P CNX Nifty was up 158.75 points or 3.18% to 5,144.60.

Elsewhere, Malaysia’s Kula Lumpur Composite index finished slightly higher at 1260.53 while stock markets in Indonesia’s Jakarta Composite index jumped 7.25 points ending the day lower at 2474.88.

In other regional market, European shares rose to 14-month highs, as banks and miners, which have made much of the running this year, gaining again. On the regional-stock-market level, the U.K. FTSE 100 index rose 0.8% or 42.41 points to 5,371, the German DAX index climbed 0.7% or 39.06 points to 5,985 and the French CAC-40 index advanced 0.7% or 27.54 points to 3,926.