Asian markets witness Tuesday twilight

Sensex, Strait times, Sydney edge lower while Nikkei, Shanghai finish higher

Stock markets in Asian region tanked on Tuesday, 12 January 2010, led by banks and mining companies, after China allowed the benchmark money-market rate to increase. China's central bank on Tuesday sold one-year bills at a higher yield for the first time since August 2009, fanning concern the government is moving to tighten liquidity.

The People's Bank of China on Tuesday raised the auction yield on one-year bills by a bigger-than-expected 8.29 basis points and drained a record 200 billion yuan ($29 billion) from the market, signaling a bias to tighten monetary conditions. Last week, the bank had surprised markets by raising the interest rate on three-month bills for the first time since August 2009, raising fears of a tightening cycle to head off economic overheating.

On Wall Street, the Dow closed higher Monday but the Nasdaq sagged, as investors awaited the kickoff to earnings season with Alcoa's report after the bell. The Dow Jones Industrial Average added 46 points, or 0.4%, at 10,664. The S&P 500 improved by 2 points, or 0.2%, at 1147, but the Nasdaq closed lower by 5 points, or 0.2%, to 2312.

In the commodity market, crude oil dropped for a second day in New York on forecasts cold weather in the eastern U.S. will abate this week, curbing heating fuel demand in the world's biggest energy user.

Crude oil for February delivery fell as much as 93 cents, or 1.1%, to $81.59 a barrel in electronic trading on the New York Mercantile Exchange, the biggest intraday drop since 21 December 2009. The contract was at $82.23 a barrel at 4:05 p.m. Singapore time.

Brent crude oil for February settlement dropped as much as 89 cents, or 1.1%, to $80.08 a barrel on the London-based ICE Futures Europe exchange. The contract, declining for a fourth day, was at $80.67 a barrel at 4:06 p.m. Singapore time.

Gold, trading little changed in Asia, may reach its highest level in more than a month on speculation the dollar will continue to weaken, fueling demand for the precious metal. Gold for immediate delivery fluctuated between gains of 0.2 percent and losses of 0.3%. It last traded up 0.2%t at $1,154.21 an ounce at 2:22 p.m. in Singapore. The metal touched an all-time high of $1,226.56 on 3 December 2009. Gold for February delivery in New York was up 0.3% at $1,154.30.

In the currency market, US dollar recovers across the board as China raised bill yields second time in a week to tightening liquidity further. Crude oil retreats yesterday's gain and is back at 82 levels while gold is also back pressing 1150. PBoC sold benchmark 1-year bill at 1.8434$ today. Last week, People's Bank of China raised yield on three-month bills to 1.3684%. The steps are viewed as sign that People's Bank of China is getting more aggressive in draining cash from the money market and prompts speculations there will more measures to come, including increasing banks' reserve ratios.

The Japanese yen advanced against euro and other major currencies in Asian trade on Tuesday on speculation local exporters were bringing home earnings from overseas after the three-day holiday, but yen pared early advances against greenback.

Japan's currency was quoted at 92.21 per US dollar on Tuesday from yesterday quote at Y92.09 per dollar in New York. The yen advanced to 133.31 against the euro from yesterday closing quote of 133.64.

The Hong Kong dollar was trading at HK$ 7.7552 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 closed lower on Tuesday as softer-than-expected home loans data weakened the currency. At the local close, the dollar was trading at $US0.9289, down 0.3 per cent from Monday's close of $US0.9312.

In Wellington trade, the New Zealand dollar came under pressure in its domestic session after reaching a near eight week high on Monday night. The NZ dollar was at US73.99c at 5pm, down from US74.28c at 8am and US74.02c at 5pm yesterday. It had risen to around US74.37c on Monday night, the strongest since November 19.

The South Korean won closed at 1,123.60 won to the greenback, down from yesterday 1119.80 won.

The Taiwan dollar strengthened further against the greenback. The Taiwan dollar was trading higher against the US dollar at NT$ 31.7720, 0.0080 up from Monday's close of NT$31.7800.

In equities, Asian markets ended on a mixed note, with Alcoa's disappointing earnings weighing on the region's materials shares, while hopes for strengthening economic recovery fueled gains for shipping stocks in China.

In Japan, the share market hit new 15-month high at the end of Tuesday session, as gains in materials and resources, commodity trading firm, and machinery companies in afternoon trading as optimism about the global recovery bolstered by upbeat Chinese trade data, which overshadowed sour mood from tumbling Japan Airlines on delisting fears and profit taking in overheated stocks.

At the closing bell, the Nikkei 225 Stock Average index was at 10,879.14, gained 80.82 points or 0.75%, while the broader Topix of all First Section issues on the Tokyo Stock Exchange added 12.84 points, or 1.36%, to 954.13.

On the economy front, the Bank of Japan said that Japanese bank lending, excluding loans by credit associations, fell 1.2% last month from a year earlier, compared with a 0.1% rise in November. Ministry of Finance said today that Japan current account surplus grew 76.9% to 1.1 trillion yen ($11.9 billion) in November from a year earlier as a rebound in global demand bolstered exports.

In Mainland China, the stock market soared on Tuesday trading session, as strong gains in telecom stocks on expectation for sharp increase in 3G users this year and large-caps including banks, real estate developers on bargain hunting as optimism about the global recovery bolstered by upbeat Chinese trade data.

At the closing bell, the Shanghai Composite Index, measuring A shares and B shares on the Shanghai Stock Exchange, rose 1.91%, to 3,273.97, while the Shenzhen Component Index on the smaller Shenzhen Stock Exchange added 1.67% to 13,381.25. The CSI 300 Index, measuring exchanges in Shanghai and Shenzhen, surged 1.52%, to 3,534.92.

In Hong Kong, the share market tumbled on Tuesday, as a weak lead from offshore market and profit taking combined to snap a two-day rally. Banks and financials weighed the most amid worries over China monetary tightening after China allowed the benchmark money-market rate to increase, while resources shares lost steam with steep losses in Chalco after its global peer Alcoa's profits missed analyst estimates.

At the end of today's trading, the Hang Seng Index tumbled 84.88 points, or 0.38%, to 22,326.64, while the Hang Seng China Enterprise, which tracks the overall performance of 43 mainland Chinese state-owned enterprises on the Hong Kong Stock Exchange, dropped 151.66 points, or 1.16%, to 12,967.37.

In Australia, the shares market snapped two days of winning streak, with benchmark All Ordinaries tumbled on Tuesday as a weak offshore cues and profit-taking. Most sectors fell below the line as investors looked to lock in profits made recently. Mining and banking stocks led the declines and the retailers share also under a cloud today.

At the closing bell, the benchmark S&P/ASX200 index tumbled 51.2 points, or 1.03%, to 4,899.50, meanwhile the broader All Ordinaries retracted 49.6 points, or 1%, to 4,931.60.

On the economic front, the Australian Bureau of Statistics reported today that Australia dwelling commitments was down a seasonally adjusted 5.6% month-on-month in November to 59,516, following the 1.9% fall in the previous month. The total number of home loans in Australia was down a seasonally adjusted 2.9% month-on-month in November to A$16.54 million, following the 1.6% fall in the previous month.

In New Zealand, benchmark index that increased consistently throughout the first week of year 2010 failed to hold on to its gains. The domestic share market lost the initial momentum to drop down for the second consecutive session in a row on Tuesday. Benchmark NZX50 that lost almost 6 points yesterday dipped down more than 13 points Tuesday to slip below the 3300 levels after achieving a 15-month closing high of 3310.2 on Friday. At the closing hours, the benchmark NZX-50 index ended down 13.46 points or 0.41% to 3290.29. The NZX 15 lost 23.37 points or 0.39% to close at 5985.54.

In South Korea, stocks finished higher as gains by tech blue chips and energy utilities offset losses in banks and brokerages. The benchmark Korea Composite Stock Price Index (KOSPI) added 4.52 points to 1,698.64.

In Singapore, the share market tumbled on Tuesday with benchmark Strait Times widened their losses in afternoon trading on profit booking in banks and properties and blue-chip stocks as reduce risk appetite on cautious ahead of a stream of corporate earnings. Weak European stocks and lower US index futures also dented sentiment. At the closing bell, the blue chip Straits Times Index was at 2,916.11, dropped 17.42 points or 0.59%.

In Taiwan, stock markets tanked on Tuesday as investors booked profits in tech heavyweights, including Taiwan Semiconductor Manufacturing Company and Chi Mei Optoelectronics Corporation, following their recent gains. The benchmark Taiex share index snapped its series of recent gain, by finishing the day lower by 14.45points or 0.17% at 8309.37.

In Philippines, stock closed slightly up investors still chose to exercise caution. The PSEi closed in positive territory following positive news on the economic front. Export growth rose for the first time in 14 months, indicating that demand is slowly recovering after the global downturn. However, NG's budget deficit and the rising pressure on the domestic inflation continued to be a source of concern for the market players, which limited the gains registered by the composite index. As of November of 2009, the deficit was at P272.5 billion, already way above the P250 billion cap set last year and expected to reach P290 billion by December. The benchmark index PSEi ascended 0.59% or 18.27 points to 3,105.62, while the All Shares index augmented 0.21% or 4.17 points to 1,949.12.

In India, the key benchmark indices edged lower in choppy trade as robust industrial production data for November 2009 stoked worries that the central bank will tighten monetary policy to temper inflationary expectations. Weak European stocks and lower US index futures also dented sentiment. IT stocks bucked the weak trend after strong Q3 December 2009 results from IT bellwether Infosys Technologies.

The BSE 30-share Sensex was down 104.20 points or 0.59% at 17,422.51. The S&P CNX Nifty was down 39 points or 0.74% at 5210.40.

On the economic front, latest government data showed industrial output surged in November 2009. Industrial output rose at a faster-than-expected 11.7% in November 2009 from a year earlier, helped by stimulus measures that boosted domestic demand, data showed on Tuesday. The growth was the fastest since October 2007, when the industry grew an annual 12.2%.

Manufacturing production rose 12.7% in November 2009 from a rise of 2.7% a year earlier. The final figure for October's annual industrial growth rate was unchanged at 10.3%. Industrial output rose 2.6% in the 2008/09 fiscal year (April-March), slower than 8.5% in 2007/08 as the global economic downturn hit Asia's third-largest economy.

Elsewhere, Malaysia's Kula Lumpur Composite index finished slightly lower at 1292.85 while stock markets in Indonesia's Jakarta Composite index added 27.35 points ending the day higher at 2659.55.

In other regional market, European shares edged lower, as losses in the auto and oil sectors and a less-than-impressive start to the U.S. earnings season offset results from British supermarket giant Tesco and German retailer Metro. On a regional level in Europe, the U.K. FTSE 100 index traded down 0.4% at 5,515, the German DAX index declined 0.7% to 6,001 and the French CAC-40 index lost 0.5% to 4,024.