Asian markets supercharges on Santa Clause Rally

Taiex, Sydney, Nikkei, Nifty attains new high while NZX 15 edges lower

Stock markets in Asian region headed into the Christmas break on a festive note by ending Thursday, 24 December 2009 on higher note, led by gains in technology shares, while the US dollar edged further away from recent peaks after an unexpected drop in US home sales cooled optimism about the economic recovery. Resource stocks were also in focus across the region following overnight gains in commodity prices.

On Wall Street, stocks traded in a tight range on Wednesday and eked out gains by the closing bell, as surging commodity prices helped offset a lackluster new-home sales report. The Dow Jones Industrial Average added nearly 2 points to 10,466. The S&P 500 improved 3 points, or 0.2%, to 1121, while the tech-heavy Nasdaq added 17 points, or 0.8%, to 2270.

In the commodity market, crude oil rose for a third day in New York after a government report showed a larger-than-expected decline in U.S. stockpiles, signaling a recovery in fuel demand in the world’s largest energy user.

Crude oil for February delivery climbed as much as 81 cents, or 1.1 percent, to $77.48 a barrel in electronic trading on the New York Mercantile Exchange. It was at $77.33 at 3:34 p.m. Singapore time.

Brent crude oil for February settlement rose as much as 92 cents, or 1.2%, to $76.37 a barrel on the London-based ICE Futures Europe exchange, and was at $76.05 at 3:35 p.m. Singapore time. Yesterday, it rose $1.99, or 2.7%, to end the session at $75.45 a barrel, the highest close since 7 December 2009.

Gold gained the most in a month in London as a drop in the dollar may prompt investors to buy the metal as an alternative asset. Gold for immediate delivery gained $17.35, or 1.6%, to $1,104.90 an ounce at 9:24 a.m. local time, the biggest increase since 25 November 2009. Gold for February delivery in New York was 1% higher at $1,105.30 an ounce.

In the currency market, the US dollar weakens overnight as traders lighten up positions following worse than expected new homes sales report from US as well as strong rebound in crude oil.

The Japanese yen softened against the major currencies today, little changed from its levels overnight in New York. Japan’s currency was quoted at 91.71 yen per dollar.

The Hong Kong dollar was trading at HK$ 7.7564 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 strengthened today against greenback as disappointing US housing data stalled the US dollar’s recent rally. The Australian dollar was quoted at 87.97 US cents from Wednesday’s quote of 87.59 US cents.

In Wellington trade, the New Zealand dollar's dip below US70c on weaker than expected gross domestic product data was short-lived as it gained overnight against a softer US dollar and other major currencies. The kiwi crept up to US69.92c yesterday and by early today it was at US70.55c.

The South Korean won closed at 1,175 won to the U.S. dollar, up 8.6 won from Wednesday's close.

The Taiwan dollar strengthened against the greenback. The Taiwan dollar was trading higher against the US dollar at NT$ 32.2440, 0.1160 up from Wednesday’s close of NT$32.3600.

In equities, Asian markets ended mostly higher, with Japan's Nikkei closing at a fresh three-month high, lifted by gains in techs and export-related shares as the yen remained relatively weak against leading currencies.

In Japan, the shares market shot up with benchmark Nikkei registered gains for third day in row, helped by weaker yen and after better-than-expected earnings from US peers. Exporters and high-tech stocks led the rally as a weaker yen and rising semiconductor prices. Mining stocks buoyed up on surging commodity prices. Meanwhile, buying pressure was evident in insurance, transport and manufacturing sectors.

At the closing bell, the Nikkei 225 Stock Average index was at 10,536.92, increased 158.89 points or 1.53% from its previous close, while the broader Topix of all First Section issues on the Tokyo Stock Exchange grew 10.66 points, or 1.18%, to 913.72.

On the economic front, the Ministry of Finance said in survey outcome of quarterly business outlook that business sentiment among large Japanese firms deteriorated in the October-December quarter from the previous three months, amid worries over a strong yen and deflation. The quarterly business outlook survey's large company business sentiment index was minus 1.9 in the fourth quarter, down from 0.3 in the July-September period. The data also showed that large firms expect economic conditions to deteriorate. The index was at minus 3.5 for the January-March period, followed by an improvement to 0.1 for the April-June quarter.

The government plans to spend over 560 billion yen during the year starting next April to compensate rice farmers for possible losses from falls in the prices of their produce, government officials said Wednesday. The Finance Ministry agreed to include 561.8 billion yen for the program in a draft budget for fiscal 2010 as requested by the Ministry of Agriculture, Forestry and Fisheries, they said.

According to the minutes of the November policy board meeting of the central bank released Thursday, many board members said BOJ should maintain accommodative monetary conditions amid high uncertainty over the nation's economy. At the meeting, the central bank upgraded its assessment of the Japanese economy and voted to keep its policy target rate unchanged at 0.1%.

In Mainland China, the share market shot up with benchmark Shanghai Composite registered gains for second day in row, driven by materials and resource, energy, and banking stocks after oil, metal, and gold prices continues rally and as better-than-expected earnings from US peers buoyed Wall Street. Consumer related shares gained due to demand optimism over China’s economic growth and expectation of tax slash next year to boost spending. Stocks were also riding higher on window dressing efforts by institutions.

At the closing bell, the Shanghai Composite Index, measuring A shares and B shares on the Shanghai Stock Exchange, advanced 79.63 points, or 2.59%, to 3,153.41, meanwhile the Shenzhen Component Index on the smaller Shenzhen Stock Exchange grew 3.84% or 492.01 points, to 13,305.31. The CSI 300 Index, measuring exchanges in Shanghai and Shenzhen, added 3.07%, to 3,438.82.

In Hong Kong, the share market headed into the Christmas break on a festive note, raised in the shortened session endured gains for third day in rose on the back of firmer commodity prices and strong gains in offshore markets. Hong Kong share market will be closed 25 December 2009 for the Christmas Day holiday.

At midday break, the Hang Seng Index spurted 188.26 points, or 0.88%, to 21,517, 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 145.08 points, or 1.16%, to 12,673.74.

In Australia, the market spurted in shortened session due to Christmas eve, with broad based gains across the sector on tracking firmer commodity metal and oil prices and positive close of Wall Street and European market. Financials were firmer, led by strong gains in big four banks. Materials, industrials, and energy shot up after oil, metals and gold prices booked solid gains. The Properties were sluggish due to weakness in retail property trusts. At the closing bell, the benchmark S&P/ASX200 index spurted 51.60 points, or 1.09%, to 4,790.90, meanwhile the broader All Ordinaries surged 47.20 points, or 0.99%, to 4,803.30.

In New Zealand, equities ended in the negative terrain preceding a holiday weekend owing to Christmas. At the closing bell, the NZX50 dipped 0.14% or 4.36 points to 3205.20. The NZX 15 fell 0.20% or 11.86 points to close at 5825.57.

In South Korea, shares staged a Christmas Eve rally, closing higher helped by the overnight Wall Street gains. The benchmark Korea Composite Stock Price Index (KOSPI) posted a gain of 20.99 points to 1,682.34, closing above the 1,680-mark for the first time since 29 September 2009.

In Taiwan, stock market extended its winning streak for fifth straight session as investors cheered up after a promise from Finance Minister Lee Sush-der that the government's National Stabilization Fund will not withdraw from the market before the end of the year.

Minister of Finance Lee Sush-Der said today that Taiwan will sell more than NT$700 billion worth of debt in 2010, comprising around NT$520 billion worth of bonds and NT$200 billion worth of short-term Treasury bills. Taiwan sold NT$470 billion worth of bonds in 2009. The government has said the debt level remains satisfactory and recent stimulus measures should help achieve a fiscal balance in the long run.

The benchmark Taiex share index attained a new 1-½ year high after extending gains for the fifth flat session, ending the day higher by 62.04 points or 0.79% at 7963.54, the highest closing since 19 June 2008 when market finished the day at 8047.74.

In India, volatility ruled the roost as the key benchmark indices pared gains after a sharp surge in mid-afternoon trade. The 50-unit S&P CNX Nifty struck a 19-month high just below the 5,200 mark. The BSE 30-share Sensex was up 104.93 points or 0.61%, up 137.95 points from the day's low and off 77.65 points from the day's high. The barometer index struck a 2-month high.

The BSE 30-share Sensex was up 129.50 points or 0.75% to 17,360.61. The Sensex opened 34.36 points higher at 17,265.47. It gained 182.58 points at the day's high of 17,413.69, in mid-afternoon trade, its highest level since 20 October 2009. The Sensex declined 33.02 points at the day's low of 17,198.09 in afternoon trade. The S&P CNX Nifty was up 33.80 points or 0.66% to 5,178.40. The Nifty struck an in intra-day high of 5197.90, it’s highest since 6 May 2008.

Elsewhere, Malaysia’s Kula Lumpur Composite index finished slightly higher at 1263.94 while Singapore’s Strait Times finished the day at 2837.70, i.e. 3.86 points lower. Markets in Indonesia, Philippines were closed for holiday.

In other regional market, European shares tentatively gained on Thursday, up for the fourth straight day, with miners getting a lift from an uptick in commodity prices in an abbreviated session ahead of the Christmas break. The French CAC-40 index rose 0.1% to 3,913.45 and the U.K. FTSE 100 index advanced 0.2% to 5,384.91. The German stock market is closed on Thursday.