Asian markets end weak on Wall Street cues

Shanghai, Sensex, Seoul, Sydney edge lower while Hang Seng, Nikkei follows them

Stock markets in Asian region extended their fall over weekend by ending mildly lower on Monday, 25 January 2010, as investors indulge in selling once again on the back of a sharp decline on Wall Street on Friday amid renewed worries about an economic recovery following the U.S. government proposing some stricter rules for the financial sector.

Investors were finding it difficult shrugging off concerns over possible U.S. bank restrictions, as well as monetary tightening in China. Those worries dragged U.S. shares sharply lower Friday, as the Dow Jones Industrial Average recorded its biggest one-day drop since 30 October 2009.

On Wall Street, stocks finished sharply lower Friday, weighed down by slumping tech and financial shares and uncertainty over the Obama administration's increasingly hostile approach toward Wall Street and China's economic policy. The Dow Jones Industrial Average tumbled 217 points, or 2.1%, to 10,173. The S&P 500 shed 25 points, or 2.2%, to 1092, as the Nasdaq fell 60 points, or 2.7%, to 2205.

The third straight day of declines dragged the blue-chip average down to its worst weekly performance in nearly a year. The Dow plunged 4.1% since last Friday. The S&P 500 slid 3.9% for the week, as the Nasdaq dropped 3.6%.

In the commodity market, crude oil traded near a one-month low as sliding equity markets and expectations of interest-rate increases in China dented investor confidence in the strength of the global economic recovery.

Crude oil for March delivery was at $74.51 a barrel, down 3 cents, in after-hours electronic trading on the New York Mercantile Exchange at 3:44 p.m. in Singapore. Earlier the contract fell as much as 43 cents, or 0.6%, to $74.11. It dropped 2% to $74.54 on 22 January 2010, the lowest settlement since 22 December 2009.

Brent oil for March settlement was at $72.94 a barrel, up 11 cents, on the London-based ICE Futures Europe exchange at 3:45 p.m. Singapore time. It fell 2.4% to $72.83 on 22 January 2010.

Gold climbed for the first time in four days in London on speculation that a weaker dollar and the lowest prices in a month will boost bullion’s appeal as an alternative asset. Gold for immediate delivery added $7.48, or 0.7%, to $1,100.68 an ounce at 9:45 a.m. London time. Gold for February delivery was 1% higher at $1,100.50 on the New York Mercantile Exchange’s Comex division.

In the currency market, US dollar and yen retreat mildly as the situation for Fed chairman Bernanke to win the vote for second term became more optimistic over the weekend.

The Japanese yen dropped against major currencies on Monday on prospects Federal Reserve Chairman Ben S. Bernanke will win a second term and continue recovery policies in the world’s biggest economy. Japan’s currency was quoted at 90.10 per US dollar on Monday from Friday’s quote at Y89.92 per dollar in New York.

The Hong Kong dollar was trading at HK$ 7.7674 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 steadied against the US dollar on Monday, but uncertainty in offshore markets is likely to weigh on the local currency in the near-term. At the local close, the dollar was trading at $US0.9061, up from $US0.9031 on Friday, with trading limited ahead of the Australia Day holiday.

In Wellington trades, the New Zealand dollar bounced back this afternoon, after falling against the greenback as the US market was affected by US President Barack Obama’s plan to curb bank risk-taking. The NZ dollar also lost ground on the wake of uncertainty about the future of Federal Reserve chairman Ben Bernanke, which also took a toll on US markets. But the Kiwi dollar was buying US 71.49 cents around 5 pm higher than the US 70.95 cents this morning and US 71.30 cents at 5pm Friday.

The South Korean won closed at 1150 won to the greenback, up from Friday 1151 won.

The Taiwan dollar strengthened against the greenback. The Taiwan dollar was trading higher against the US dollar at NT$ 31.9700, 0.0100 up from Friday’s close of NT$31.9800.

In equities, Asian stock markets were lower Monday, with financial shares particularly weak as investors remained risk averse following sharp losses on Wall Street Friday.

In Japan, the share market has ended the day in the red on Monday, but well off morning lows, supported by bouncing domestic currencies to lower 90 yen level and late hour bargain hunting after a plunge the previous trading day on uncertainty over the Obama administration's.

Concerns about US President Obama’s plan to limit the size and scope of US financial institutions weighed down banks and financials, while slide in commodity prices pressured on energy and metal shares. Resources and brokerage were particularly weak with falling commodity metal and oil prices. The dollar's resilience against the yen helped trim losses. The dollar held above the psychologically key Y90 level for most of the session, buoyed up export related shares.

At the end of Monday trade, the Nikkei 225 Stock Average index was at 10,512.7, dropped 77.86 points or 0.74%, while the broader Topix of all First Section issues on the Tokyo Stock Exchange fell 6.35 points, or 0.67%, to 934.59.

In Mainland China, the stock index got hammered by worries about the US economy following the worst three-day slump on Wall Street in 10 months, retreat in commodity prices, and tightening lending conditions. Cautious over early withdrawal of government stimulus packages to prevent the world’s fastest-growing major economy from overheating triggered selling across major heavyweights, with financials and materials led the decline.

At the end of Monday’s trade, the Shanghai Composite Index, measuring A shares and B shares on the Shanghai Stock Exchange, dropped 34.18 points, or 1.09%, to 3,094.41, while the Shenzhen Component Index on the smaller Shenzhen Stock Exchange dived 125.75 points, or 1%, to 12,470.19. The CSI 300 Index, measuring exchanges in Shanghai and Shenzhen, dropped 1.13%, to 3,328.01.

In Hong Kong, the stock market tumbled to its lowest level in three month on tracking regional weakness after Wall Street Friday triple digit slumps on uncertainty over the Obama administrations and fall in commodities. Meanwhile declines were also fueled by renewed worries about fundraising by other lenders after Bank of China plan to raise capital as much as 40 billion Yuan to bolster its capital.

At the end of Monday’s session, the Hang Seng Index dropped 127.63 points, or 0.62%, to 20,598.55, while the Hang Seng China Enterprise, which tracks the overall performance of 43 Mainland Chinese state-owned enterprises on the Hong Kong Stock Exchange, shrank 117.19 points, or 0.98%, to 11,858.46.

In Australia, the shares stretching losses to a third straight session as investor sentiment battered by continued falls on Wall Street Friday on renewed concerns over the US economy, retreat in commodity prices, and tightening lending conditions in China. At the closing bell, the benchmark S&P/ASX200 index dropped 32.70 points, or 0.69%, to 4,717.9, meanwhile the broader All Ordinaries dived 28.80 points, or 0.6%, to 4,743.10.

In New Zealand, the share market drifted south in today trading as the fallout from two days of falls on Wall Street continued to affect the global market. At the closing today, the NZX 50 inched lower by 0.06% or 1.77 points to 3188.66. Meanwhile, the NZX 15 added 0.01% or 0.68 points to close at 5748.88.

In South Korea, stocks closed lower Monday as a U.S. plan to tighten bank regulations caused local bank shares to plunge. The benchmark Korea Composite Stock Price Index (KOSPI) dropped 14.15 points to end at 1,670.2.

In Singapore, the share market was lower with financial shares particularly weak as investors remained risk aversion following sharp losses on Wall Street Friday on renewed concerns about the global economy, but bargain hunting after a plunge the previous trading day limited losses. Banks and properties tumbled as US proposals to curb excessive risk-taking by banks, meanwhile falling commodities prices took toll on manufacturing and multi-industries shares. At the end of Monday’s trade, the blue chip Straits Times Index was at 2,811.71, shed 8 points or 0.28%.

On the economic front, the Department of Statistics said in a statement in Singapore today that the consumer price index in December was unchanged from a year earlier, after falling 0.2% in November. Singapore’s consumer price index dipped 0.5% in December 2009 over November 2009. This was due mainly to lower costs of housing and transport & communication.

In Taiwan, stock market tumbled to a fresh one month low as major technology exporters eased in the wake of losses on Wall Street on fears of U.S. government restrictions on banks. The benchmark Taiex share index extended loses to sixth straight session, as the index finished lower by 54.32 points or 0.69% at 7872.99, the lowest closing since 22 December 2009 when market finished at 7856.

In Philippines, the stock market closed lower, with investors continuing to be largely guided by overseas developments. Investors monitored developments on the Obama plan and China’s tightening as they have the potential of stalling global economic recovery. Moreover, NG’s budget deficit and speculation of a “possible” key rate adjustment from the Monetary Board of the Bangko Sentral ng Pilipinas continued to be a source of concern for the market players. At the concluding bell, the benchmark index PSEi lost 1.83% or 55.51 points to 2,967.96, while the All Shares index tumbled 0.93% or 17.86 points to 1,889.03.

In India, selling pressure in late trade following disappointing earnings from auto major Mahindra & Mahindra (M&M) derailed a sharp pullback on the bourses. As a result, key benchmark indices extended losses for the fifth straight session with weak global cues playing the spoilsport. High volatility was the hallmark of the day's trading session. The BSE 30-share Sensex was down 79.22 points or 0.47% to 16,780.46. The S&P CNX Nifty was down 28.10 points or 0.56% to 5007.90.

Elsewhere, Malaysia’s Kula Lumpur Composite index finished slightly lower at 1296.79 while stock markets in Indonesia’s Jakarta Composite index fell by 12.48 points ending the day higher at 2597.86.

In other regional market, European shares moved off their worst levels on Monday, helped by gains for banks and miners. The U.K. FTSE 100 index rose 0.3% to 5,317.22, the French CAC-40 index traded flat at 3,821.51 while the German DAX index declined 0.3% to 5,676.39.