Asian Markets Finishes Final Friday of February Flat

Sensex led regional rally while Shanghai bucks the trend

Stock markets in Asian region finished final Friday of February on favorable note, thanks to the positive economic development in India and Japan. Indian equities lead the regional gains as Indian government announced its annual budget with a proposal to cut the fiscal deficit and ease the tax burden on individuals. Japanese markets gained on better than expected industrial production data which was supported by spurt in retails sales. However, gains across the region were limited as investors continued to trade cautious as worries about Greece and the health of the world economy continue to hold the nerves of the investors.

On Wall Street, stocks managed to curtail their losses and end with moderate losses. A surprising jump in jobless claims hammered stocks leaving the major averages with large, consistent losses during mid day trading hours. The claims data renewed worries about the pace of the U.S. economic recovery, while comments by Moody's regarding Greece served as a fresh reminder to investors of Europe's recent struggles.

At the end of the day, the Dow Jones Industrial Average ended lower by 53.13 points at 10321.03 while Nasdaq ended lower by 1.68 points at 2234.22. S&P 500 ended lower by 2.3 points at 1102.94.

In the commodity market, crude oil is poised for the biggest monthly advance since October as the U.S. economy starts to recover and fuel inventories fall.

Crude oil for April delivery advanced 14 cents, or 0.2%, to $78.31 a barrel in electronic trading on the New York Mercantile Exchange as of 9:40 a.m. in London. A close at that level would mean an increase this month of 7.4%.

Brent crude for April settlement gained 18 cents, or 0.2%, to $76.47 a barrel on the London-based ICE Futures Europe exchange as of 9:43 a.m. London time.

Gold gained for a second day in London, paring a weekly decline, as concerns about Greece’s debts and a stall in the dollar’s rally increased the metal’s appeal as an alternative investment. Gold for immediate delivery added $6.05, or 0.6%, to $1,112.40 an ounce at 9:26 a.m. London time. The metal is down 0.6%t this week. Bullion for April delivery was 0.4% higher at $1,112.60 on the New York Mercantile Exchange’s Comex unit.

In the currency market, the U.S. dollar continued with a mixed bias in late Asian trade Friday, holding on to slight gains against the yen but losing ground versus the euro against a backdrop of still-cautious risk sentiment although month-end flows kept the euro-zone currency afloat near morning highs.

The Japanese currency strengthened against major counterpart on speculation Japanese importers are settling accounts overseas on the last trading day of the month as well as on news the nation’s finance companies are scheduled to raise 1.44 trillion yen ($16.1 billion) today for so-called toshin mutual funds focused on higher-yielding assets. The Japan’s currency yen was quoted at 89.35 against the greenback.

The Hong Kong dollar was trading at HK$ 7.7627 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 Australia dollar steadied against the US dollar and the yen on Friday, as Asian equity markets stabilised and investors looked ahead to a possible rise in domestic interest rates next week. The dollar steadied to close locally at $US0.8905, having skidded as far as $US0.8800 in offshore trade. But again, that was well short of the week's $US0.9071 top.

In Wellington trades, the New Zealand dollar firmed slightly today after falling to its lowest level in more than two weeks against the greenback and yen overnight. The NZ dollar dropped to around US68.45c but by 8am was back up to US69.37c by 5pm, above the US68.85c at 5pm yesterday. It traded as high as US69.60c during the domestic session.

The South Korean won ended at 1160 won to the greenback, up 3.4 won from Thursday’s close of 1,163.4.

The Taiwan dollar strengthened against the greenback. The Taiwan dollar was trading higher against the US dollar at NT$ 32.0850, 0.0350 up from Thursday’s close of NT$32.1200.

In equities, Asian markets ended mostly higher, with Indian shares cheering federal budget proposals to cut the fiscal deficit and ease the tax burden on individuals, while Japanese stocks gained on better-than-expected industrial-output data.

In Japan, the share market finished the last trading day of week as well as February slightly higher, with key indices snapping three days of losing streak helped by better than expected Japanese January industrial output lending support, although jitters over a stronger yen against the euro and unexpectedly weak US data lingered. The Nikkei index finished virtually exactly were it started the week, while it fell 0.7% for the month.

At the closing bell, the Nikkei 225 Stock Average index was at 10,126.03, added 24.07 points, or 0.24%. The broader Topix of all First Section issues on the Tokyo Stock Exchange climbed 2.69 points, or 0.3%, to 894.10.

On the economic front, the Ministry of Economy, Trade and Industry said Industrial output in Japan was up a seasonally adjusted 2.5% on month in January, climbing for the 11th consecutive month. On an annual basis, industrial production jumped 18.2% after the 5.1% gain in the previous month.

The Ministry of Economy, Trade and Industry also reported retail sales in Japan climbed 2.6% in January compared to the previous year, rising for the first time in 17 months. On a monthly basis, retail sales surged by a seasonally adjusted 2.9% after the 1.1% contraction in December.

The Ministry of Internal Affairs and Communications said Core consumer prices in Japan declined 1.3% on year in January, extending decline for the 11th straight month and reinforcing deflationary fears. Overall CPI eased 0.2% on month.

Markit Economics reported that the Japan Nomura / JMMA Manufacturing Purchasing Manager’s Index stood at a seasonally adjusted 52.5 in February, unchanged from the previous month. A reading above 50 indicates expansion, while one below 50 suggests contraction.

In Mainland China, the share market closed inch lower, as investor sentiments toward risk was subdued following credit agencies’ warnings of further downgrades of Greece’s sovereign debt, further domestic monetary tightening woes, and the uncertainty about the recovery in the US following worse-than-expected jobs data. The benchmark index registered 1.1% gain for the week and a rise of 2.1% for the month, but it fell 6.9% this year on worries about monetary tightening, sovereign debt, and the sustainability of the global recovery.

At the closing bell, the Shanghai Composite Index, measuring A shares and B shares on the Shanghai Stock Exchange, fell 8.68 points, or 0.28%, to 3,051.94, meanwhile the Shenzhen Component Index on the smaller Shenzhen Stock Exchange fell 57.61 points, or 0.46%, to 12,436.66. The CSI 300 Index, measuring exchanges in Shanghai and Shenzhen, erased 0.32%, to 3,281.67.

In Hong Kong, the share market finished the session higher, with broad based gains across the sectors on hopes recent sell off was overdone and as metals prices advanced in Asian deal. The benchmark index registered 3.6% gain for the week and a rise of 2.4% in the February 2010.

At the closing bell, the Hang Seng Index spurted 209.13 points, or 1.03%, to 20,608.70, meanwhile the Hang Seng China Enterprise, which tracks the overall performance of 43 Mainland Chinese state-owned enterprises on the Hong Kong Stock Exchange, surged 155.23 points, or 1.36%, to 11,543.73.

In Australia, the domestic market rebounded on the last day of the month-long corporate profit reporting season, helped by bargain hunting in materials and resources financials, properties, and utilities as well as a string of upbeat earnings from blue chip companies. The benchmark index managed to chalk up a minimal gain for the week and a rise of 1.3% for the month. At the closing bell, the benchmark S&P/ASX200 index was up 43.60 points, or 0.95%, to 4,637.70, meanwhile the broader All Ordinaries added 36.20 points, or 0.78%, higher to 4,651.10.

On the economic front, the Reserve Bank of Australia reported Friday that for the full year to January 2010, private sector credit increased 1.3%. The total amount of credit extended to private sector recipients in Australia increased 0.4% in January 2010 versus the preceding month. Credit for housing increased 0.7% for the month. For the year to January, housing sector credit increased 8.2%. Business credit declined 0.1% on month and was down 7.8% for the year to January.

In New Zealand, stock market continued to edge forward to end the last trading day of the week in the positive terrain. The benchmark index although started the day lower, inched up by the end of the session on Friday, registering the third consecutive rise in a row. At the closing today, the NZX 50 was up 0.14% or 4.42 points to 3156.10. Meanwhile, the NZX 15 gained 0.17% or 9.84 points to close at 5682.31.

On the economic front, New Zealand recorded its smallest annual trade deficit since July 2002 in January, reflecting weaker-than-expected imports outpacing a decline in exports. For the month of January, merchandise trade recorded a surplus of $269 million, the first in eight months. The deficit was $178 million in the 12 months ended January 31, from a revised deficit of $549 million in the year through December.

In South Korea, stocks closed higher as investors hunted for bargains following a two-session losing streak. The benchmark Korea Composite Stock Price Index (KOSPI) increased 7.07 points or 0.45% to end at 1,594.58.

In Singapore, the key benchmark indices finished the session flat, with investor jitters over unexpectedly weak US data outweighed by a wave of short covering after stronger than expected economic data from Japan and Korea. The benchmark index managed to chalk down a minimal loss of 0.2% for the week and a minimum rise of 0.2% for the month. At the closing bell, the blue chip Straits Times Index was at 2,750.86, rose 1.71 points or 0.06%, off an intraday high of 2,756.28 and off an intraday low of 2,738.71.

On the economic front, the Singapore Tourism Board said total visitor arrivals in Singapore rose 17.6% in January from a year earlier to reach 908,000. Average hotel room rates in January fell 9.5% from a year earlier to S$187 ($133) although occupancy rose 13.9 percentage points from a year ago to 80.4%, the STB said in a statement.

In Taiwan, stocks edged up on Friday, helped by data the previous day showing solid export orders for January, but investor caution over the global recovery kept a lid on gains. Financial shares gained after Taiwan said it would allow brokerages to buy Hong Kong red chip shares directly, though it was a mixed bag for tech shares, with the electronics sub index closing down. A number of concerns underpinned investor caution towards risky assets such as stocks, including poor economic data in the United States and the euro zone and worries over debt problems in Greece. The benchmark Taiex share index finished the day higher by 9.14 points or 0.12% at 7436.10.

In Philippines, the stock market closed the week on a positive note, with PSEi still hovering above the 3000 crucial mark, as investors continued to applaud for some of the encouraging manifestations of a recovery from the domestic economy. At the closing bell, the benchmark index PSEi escalated 0.41% or 12.49 points to 3,043.75, while the All Shares index went up 0.64% or 12.38 points to 1,928.34.

In India, the key benchmark indices pared gains after a sharp surge in early afternoon trade triggered by the finance minister's budget which pushed for higher consumption. The government's pledge to progressively cuts its budget deficit over the next three fiscal years, changes in personal tax rates which will lift disposable incomes in the hand of individuals and a reduction in surcharge on corporate tax for domestic companies to 7.5% from 10%, lifted sentiment. The government's plan to introduce direct and indirect tax reforms from 1 April 2011 also cheered investors. The Finance Minister said the government aims to introduce the Goods and Services Tax (GST) and implement the direct tax code from 1 April 2011

The peak rate of excise duties has been raised to 10% from 8% as a first step towards the winding down of fiscal stimulus measures. However, the service tax was retained at 10%. The government has estimated Rs 40000 crore from disinvestment for FY 2010-11. It has estimated Rs 35000 crore from sale of third generation telecom auctions.

The finance minister has raised personal income tax slabs which will result in increase in disposable incomes. Incomes up to Rs 1.6 lakh attracts no tax now. Personal income tax for income between Rs 1.6 -5 lakh attracts tax rate of 10% and for the income between 5-8 lakh attracts tax of 20%. The personal income tax above Rs 8 lakh tax is kept at 30%. The Finance Minister said additional Rs 20,000 deduction available will be available for investment in infrastructure bonds. He said threshold limit for TDS applicability will be rationalized.

The BSE 30-share Sensex was up 175.35 points or 1.08% to 16,429.55. The barometer index rose 415.05 points at the day's high of 16,669.25 in early afternoon trade. The Sensex fell 4.53 points at the day’s low of 16,249.67 in early trade. The 50-unit Nifty was up 62.55 points or 1.29% to 4922.30.

In other regional market, shares climbed in Europe on Friday, taking back some sharp losses made in the previous session when worries about Greece’s fiscal health dominated. On a regional level in Europe, the U.K. FTSE 100 index rose 1% or 50.80 points to 5,329, the German DAX index advanced 1% or 54.10 points at 5,586 and the French CAC-40 index rose 1.1% or 41.63 points to 3,682.