Asian markets close mixed

Sensex, Sydney, Hang Seng finish lower while Shanghai, Seoul, Nikkei edge higher

Stock markets in Asian region finished mixed on Thursday, 21 January 2010, as some of the regional markets recouped their early losses while some posted their lowest closing in the year 2010, thanks to China’s strong fourth quarter growth which reinforcing fears that Beijing would take more measures to keep the economy from overheating. China's economy expanded by 10.7% between October and December, compared with a year earlier, meeting market expectations, but up sharply from 9.1% in the third quarter.

On Wall Street, stocks finished sharply lower Wednesday as mixed bank earnings and political uncertainty weighed on the indices. The Dow Jones Industrial Average shed 122 points, or 1.1%, at 10,603. The S&P 500 lost 12 points, or 1.1%, to 1138 and the Nasdaq declined by 29 points, or 1.3%, to 2291.

In the commodity market, crude oil rose from a four-week low after China’s economy expanded at the fastest pace since 2007, bolstering expectations demand in the world’s second-biggest energy user will increase.

Crude oil for March delivery rose as much as 46 cents, or 0.6 percent, to $78.20 a barrel in electronic trading on the New York Mercantile Exchange. It was at $77.91 at 4:23 p.m. in Singapore. Yesterday, the contract declined $1.58, or 2 percent, to end the session at $77.74. The February contract, which expired yesterday, fell $1.40, or 1.8 percent, to $77.62.

Brent crude oil for March settlement rose as much as 35 cents, or 0.5 percent, to $76.67 a barrel on the London-based ICE Futures Europe exchange. It was at $76.36 a barrel at 4:24 p.m. Singapore time. It declined $1.31, or 1.7 percent, to end the session at $76.32 a barrel yesterday.

Gold rallied, pacing gains in precious metals including platinum, after its biggest drop in a month lured buyers and the US dollar’s rally paused. Gold for immediate delivery increased 0.5% to $1,116.88 an ounce at 2:44 p.m. in Singapore after gaining as much as 0.6% to $1,117.49 an ounce. February-delivery bullion in New York was little changed at $1,116.80 an ounce.

In the currency market, Japanese yen is a touch softer in Asian session today after China released solid growth data. However, the reaction is so far mild as investors are still concerned that surging inflation and risk of asset bubbles would trigger more tightening measures from the Chinese government. Japan’s currency was quoted at 91.74 per US dollar on Thursday.

The Hong Kong dollar was trading at HK$ 7.7694 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 trades, the Australian dollar was lower at noon amid concerns tighter lending rules in China could subdue a recovery in the global economy. The Australian dollar was recently trading at $US0.9125, down 0.4 per cent from Wednesday’s close of $US0.9163.

In Wellington trades, the NZ dollar got a lift from strong retail sales data today but it did not last for long as the US dollar surged to a four-month high after China reported strong fourth quarter growth. The NZ dollar rose about 30 points from US71.90c to US72.30c after Statistics New Zealand said both total sales, and core retail sales which exclude vehicle-related industries, rose a seasonally adjusted 0.8 percent in November. The NZ dollar retreated and was US72.09c at 5pm from US71.93c at 8am and US72.95c at 5pm yesterday.

The South Korean won closed at 1137.10 won to the greenback, up from Wednesday 1138.20 won.

The Taiwan dollar strengthened against the greenback. The Taiwan dollar was trading higher against the US dollar at NT$ 31.9150, 0.0850 up from Wednesday's close of NT$31.9900.

In equities, Asian markets ended mixed, with Japanese stocks finishing higher as the yen's weakness spurred exporters such as Sony Corporation, while Hong Kong shares declined as strong Chinese economic data added to fears of further policy tightening.

In Japan, the stock market in Japan snapped 3-day losing streak and ended in positive territory on Thursday, lifted by high tech stocks on increasing optimism about growth and better quarterly results. Bargain hunting at lower levels, interest in Japanese stocks from foreign buyers and weaker local currency overshadowed the weak closing on Wall Street in the previous session as well as concerns about China's measures to tightening policy measures.

The benchmark Nikkei 225 Index climbed 130.89 points, or 1.22%, to 10,868, while the broader Topix index of all First Section issues gained 11.31 points, or 1.20%, to 956.

On the economic front, a final report published by the Cabinet Office in Japan revealed that the country's leading index for November was revised downwards to 90.7 from 91.2 reported earlier in the preliminary report. The report further noted that despite the marginal downward revision, leading index has improved for the ninth consecutive month in November.

Separately, results of a quarterly survey released by the Bank of Japan revealed that corporate demand for bank loans in the country declined to a five-year low during the last quarter of 2009. According to the results, the index measuring firms' demand for loans declined to -17 for the period October to December from -14 recorded for the previous three-month period of July to September.

In Mainland China, stocks flipped back the direction in the closing hours and ended slightly up today with the bullish GDP data summing up the day in favor of bulls. Stocks edged up despite an early setback due to weak overnight cues from the US markets and a rapid bout of appreciation in the US dollar eroding the risky assets. Gross domestic product in the world's third-largest economy returned to double-digit growth in the fourth quarter of 2009 at 10.7%, and over the full year GDP surpassed the Government's target of eight per cent. The 10.7% growth in the final quarter of 2009 was the best result since the second quarter of 2008.

Inflation also surged towards the end of the year, according to government data that laid bare the risks of overheating. The nation's consumer price index, the main gauge of inflation, rose 1.9% year-on-year in December. China's authorities are already clamping down on bank lending and hiking borrowing costs to keep a lid on price pressures.

At the end of trade, the Shanghai Composite Index, measuring A shares and B shares on the Shanghai Stock Exchange, inched up 7.01 points, or 0.22%, to 3,158.86, while the Shenzhen Component Index on the smaller Shenzhen Stock Exchange has added 1 points, or 0.01%, to 12,917.15. The CSI 300 Index, measuring exchanges in Shanghai and Shenzhen, gained 0.42%, to 3,402.57

In Hong Kong, stock markets tumbled to their lowest level in more than three months, as investors exited Chinese banks and property stocks after strong economic data from China reignited fears of further tightening measures.

At the closing bell, the Hang Seng Index stumbled 423.50 points, or 2%, to 20862.67 – the lowest closing since 6 October 2009. Meanwhile the Hang Seng China Enterprise, which tracks the overall performance of 43 mainland Chinese state-owned enterprises on the Hong Kong Stock Exchange, shrank 324.26 points, or 2.64%, to 11957.83.

In Australia, stock markets in Australia tumbled on Thursday as investors took their lead from the biggest slide on Wall Street since mid-December and 2% falls on European markets, sparked by fears that China’s decision to limit bank lending could endanger the global economic recovery. These fears were reinforced after China posted strong fourth-quarter growth figures this afternoon. The benchmark S&P/ASX200 index was 41 points lower, or 0.84%, at 4827.20. The broader All Ordinaries fell 45.50 points, or 0.9%, to 4849.60.

In New Zealand, equities continued to portray a lackluster performance, inching down by a little more than 4 points after witnessing a drop of around 8 points yesterday. At the closing today, the NZX 50 edged down 0.06% or 1.96 points to 3225.29. Meanwhile, the NZX 15 lost 0.08% or 4.81 points to close at 5815.66, losing for the ninth day in a row.

In South Korea, stocks closed higher as investors digested fears over China's most recent tightening measures. The benchmark Korea Composite Stock Price Index (KOSPI) climbed 7.63 points to 1,722.01.

In Taiwan, stock markets fell for fourth session finishing at three weeks intraday low on Thursday, led by technology firms, after China ordered some big banks to curb lending to avoid its economy from overheating. China’s economy grew by 10.7% in the fourth-quarter compared to a year earlier, taking full-year growth to 8.7%, easily surpassing Beijing's 8% target. But its rapid growth has been accompanied by acceleration in inflation, which has reinforced worries over economic overheating.

The benchmark Taiex share index extended loses to fourth session, as the index finished day lower by 93.06 points or 1.13% at 8127.87, the lowest closing since 30 December 2009 when market finished at 8112.28.

In Philippines, the stock market closed flat largely due to the absence of fresh local leads. Its moderate upside, however, was due to investors’ aggressive buying of some index related stocks, especially Integrated Micro-Electronics. At the final bell, the benchmark index PSEi mounted 0.05% or 1.72 points to 3,085.58, while the All Shares index went up 0.04% or 0.83 points to 1,931.45.

In India, disappointing Q3 results from frontline companies sparked a sell-off on the bourses. The market extended losses for the third straight day. Shares from sectors related to infrastructure were the worst hit. The BSE 30-share Sensex was down 423.35 points or 2.42% to 17,051.14. The S&P CNX Nifty was down 127.55 points or 2.44% to 5094.15.

On the economic front, the food price index rose 16.81% in the 12 months to 9 January 2010, while the fuel index was up 6.34%, the government said on Thursday. The rise in food price index was lower than an annual rise of 17.28% in the previous week. The annual wholesale inflation rose to 7.31% in December 2009, compared with 4.78% in November and 6.15% a year ago. Finance minister Pranab Mukherjee said on Wednesday the government was taking steps to contain inflation. The situation is constantly under review, he said. He also promised more measures to check the rise in the prices of essential commodities.

Elsewhere, Malaysia’s Kula Lumpur Composite index finished slightly higher at 1308.36 while stock markets in Indonesia’s Jakarta Composite index inched down by 28.88 points ending the day higher at 2638.38.

In other markets, European shares pulled back from early gains on Thursday as miners reversed course, offsetting gains from drug makers and food producers. The major regional indexes fared better. The U.K. FTSE 100 index fell 0.21% or 11.34 points to 5,409, the German DAX index was trading at par at 5,852 and the French CAC-40 index rose 0.2% or 5.99 points to 3,955.

On the economic front, private-sector output growth in the 16-nation euro zone slowed in January. The closely-watched Markit preliminary composite purchasing manager’s index slipped to 53.6 in January from a reading of 54.2 in December. A reading of more than 50 means a majority of managers saw a rise in activity, while a figure of less than 50 signals a contraction.