Asian Markets turns timid on Thursday

Shanghai led losses while Nikkei, Taiex follows where as Sydney stands as lone gainer

Stock markets in Asian region showed some profit-taking on Thursday, 4 March 2010, amid renewed concerns over Chinese banking officials imposing lending restrictions to contain the overheated economy.

Shanghai Composite was leading the regional bourses to the downside with a 2% slide. After four consecutive winning sessions in Tokyo, Nikkei-225 was down 1%. Taiwan's Taiex was next in line of decliners, lower by 0.8% despite press speculation of Taiwan-China free-trade talks taking place in March, as massive 6.5 magnitude earthquake rocked the country. Sydney's S&P/ASX was the only regional gainer by 0.3%, while US equity futures saw a 0.4% slide to 1,114.

On Wall Street, stocks closed flat, despite improving signs for the economy in data and the Federal Reserve's beige book, after President Obama called on lawmakers to push forward on health care reform.

The beige book, which examines anecdotal economic conditions throughout the country found that while economic activity remains slow, the 12 districts reported modest improvements that were more widespread than the central bank's last report. The beige book, which will be used as a reference for the Federal Open Market Committee's meeting on 16 March, also found housing and labor markets remain weak, and price pressures continue to be subdued. But in a speech at about the same time, President Obama urged Congress to schedule a final vote on a health care bill, saying that the debate over the legislation has run its course.

Stocks sank soon after. The Dow Jones Industrial Average, which was up more than 50 points earlier in the session, lost 9 points, or 0.1%, at 10,397. The S&P 500 added about half a point to 1119 and the Nasdaq finished largely flat at 2281.

In commodity market, crude oil traded near $81 a barrel after rising yesterday as reports showed improvement in the U.S. job market and refineries operated at the highest level since October in the world's biggest energy consumer.

Oil climbed to a seven-week high yesterday as service industries in the U.S. accelerated in February more than anticipated, indicating the economic expansion may soon create jobs following the worst employment slump in the post-World War II era. Inventories of crude oil rose 4.03 million barrels and refinery utilization increased 0.7% in the U.S. last week, according to the Energy Department.

Crude oil for April delivery was at $80.65 a barrel, down 22 cents, in electronic trading on the New York Mercantile Exchange at 1:23 p.m. Singapore time. Yesterday, the contract increased $1.19, or 1.5%, to $80.87, the highest settlement since 11 January 2010.

Brent crude oil for April delivery traded at $79.05 a barrel, down 20 cents, on the London-based ICE Futures Europe exchange at 1:22 p.m. Singapore time. Yesterday, the contract climbed $1.07, or 1.4%, to $79.25.

Gold dropped for the first time in six days as the dollar rebounded and investors sold the metal to lock in gains after the longest rally in five months. Gold for immediate delivery fell as much as 0.4% to $1,135.30 an ounce, and traded at $1,135.83 at 2:16 p.m. in Singapore. Bullion gained 3.8% in the past five days, the longest winning streak since the period ending 8 October 2009.

In the currency market, the U.S. dollar continued to trade with a mixed tone in late Asian trade Thursday, slipping to session lows against the yen but keeping a firm foothold versus the euro ahead of key events, including a European Central Bank meeting later.

The Japanese yen strengthened against major currencies on Thursday in Asia. Investors were watching most is whether the yen will weaken or rise against the dollar. The movements of USD/JPY likely depend on outcome of jobs data due out Friday. The Japan's currency yen was quoted at 88.42 against the greenback.

The Hong Kong dollar was trading at HK$ 7.7629 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 slipped after the resource-sensitive currency came under pressure from declining commodity prices. At the local close, the dollar was trading at $US0.9016, down from Wednesday's close of $US0.9051. Since 7am, the local unit traded between $US0.9011 and $US0.9063.

In Wellington trades, the New Zealand dollar eased along with other currencies as the US dollar rose and was back at new near-decade low against its trans-Tasman counterpart. The NZ dollar was at US68.99c at 5pm from US69.70c at 5pm yesterday.

The South Korean won closed at 1,144.60 won to the greenback, up 1.90 won from Wednesday's close of 1,146.50, as easing Greek woes stoked investor appetite for risky assets.

The Taiwan dollar strengthened against the greenback. The Taiwan dollar was trading higher against the US dollar at NT$ 31.9880, 0.0160 up from Wednesday's close of NT$ 32.0040.

In equities, Asian shares were mostly lower as Wall Street's tepid performance Wednesday failed to inspire markets, but shippers were up in Japan and mining plays were supporting Australian stocks.

In Japan, the key indices widened losses in the afternoon and finishing at 1.1% below the line as stronger yen and cautious ahead of US non farm payrolls report tomorrow shrugged off initial buying incentives from fresh austerity measures announced by Greece to rein in its ballooning debt. Selling in afternoon was also triggered by tracking losses in other key Asian equities including Chinese and Hong Kong shares.

Greece announced cost-cutting measures Wednesday that will save the debt-challenged country 4.8 billion euro, ($6.53 billion) this year. Officials expect the measures will reduce Greece's budget deficit to 8.7% of the country's gross domestic product this year from a level of 12.7% last year, according to the report.

At the closing bell, the Nikkei 225 Stock Average index was at 10,145.72, eased 107.42 points, or 1.05%. The broader Topix of all First Section issues on the Tokyo Stock Exchange erased 8.01 points, or 0.88%, to 897.64.

On the economic front, the Ministry of Finance survey released Thursday showed that capital expenditure was down 17.3% on year in the October-December period. But the fall was milder than the 24.8% drop in the July-September quarter. The quarterly survey also showed that ordinary profits were up 102.2% on year, compared with a 32.4% fall in the July-September period. Sales were down 3.1% compared with their 15.7% fall in the previous quarter

In Mainland China, the key indices stumbled on broad based slumps across the sector as investors scrambled to unload shares for quick profits amid concerns government tightening measure would curb economic growth and companies earning. Selling pressure was further intensified in afternoon on tracking losses in other key Asian equities markets and cautious ahead of the start of the country's annual legislative session Friday and US non-farm jobs data due out tomorrow.

At the closing bell, the Shanghai Composite Index, measuring A shares and B shares on the Shanghai Stock Exchange, surrendered 73.63 points, or 2.38%, to 3,023.37. The Shenzhen Component Index on the smaller Shenzhen Stock Exchange fell 299.80 points, or 2.38%, to 12,312.89. The CSI 300 Index, measuring exchanges in Shanghai and Shenzhen, has lost 2.53%, to 3,250.57.

In Hong Kong, the key indices extended morning loses in afternoon trades and finished nearly 1.4% below the line, with banks and financials led the retreat amid renewed fundraising and slower earning growth amid the credit tightening measures. Steep sell off in China Mobile on concern telecom giant might deviate from its main business weighed on telecom sector.

At the closing bell, the Hang Seng Index fell 301.01 points, or 1.44%, to 20,575.78, meanwhile the Hang Seng China Enterprise, which tracks the overall performance of 43 Mainland Chinese state-owned enterprises on the Hong Kong Stock Exchange, erased 273.19 points, or 2.27%, to 11,775.06.

In Australia, late flourish in the share market helped benchmark indices to registered fifth consecutive gains, as strength in mining, retailers, and property trusts. The key indices opened with positive note after fresh austerity measures announced by Greece to rein in its ballooning debt, but turned lower in the afternoon trade amid caution after the US Federal Reserve signaled that the economic recovery would be slow because of weak demand for loans and a mostly soft job market. Moreover, late round of short covering helped the market to close in black.

At the closing bell, the benchmark S&P/ASX200 index was at 4,750.50 rose 14.80 points, or 0.31%. The broader All Ordinaries was at 4,757.60, added 13.80 points, or 0.29%.

On the economic front, the Australian Bureau of Statistics said Thursday that the balance on goods and services was a deficit of A$1.176 billion in January 2010 in inflation adjusted terms, decline of A$998 million on the revised deficit of A$2.174 billion in December 2009.

In New Zealand, the equities moved forward to end on a positive note. The benchmark index gained since early hours today up almost 5.44 points to 3203.96. The index has lifted for the previous six straight trading days, as it pulls away from a 5-1/2 month low around 3060 in mid-February. The benchmark index is correctly trading at more than a months high after dipping down sharply during the month of February. At the closing today, the NZX 50 added 0.42% or 13.35 points to 3213.56. Meanwhile, the NZX 15 gained 0.54% or 31.06 points to close at 5750.64.

In South Korea, stocks finished lower on Thursday as investors slowed purchases ahead of the opening of China's parliament and key U.S. macroeconomic data due this week. The benchmark Korea Composite Stock Price Index (KOSPI) dropped 4.24 points to 1,618.20, ending a three-session winning streak.

In Singapore, the key indices widened losses in the afternoon and finished down, as worries about Greece and the gloomy outlook for the global economy made investors cautious. Interest rate sensitive companies including banks and properties also ranked in retreat, while palm oil producers and manufacturing companies shares were lower in technical correction after yesterday's gains. At the closing bell, the blue chip Straits Times Index was at 2,768.70, slid 14.09 points or 0.51%.

In Taiwan, stock markets finished at a near one-week closing low, with technology firms leading, first on concerns a strong earthquake might affect output and then on worries about demand. A 6.4 magnitude earthquake hit southern Taiwan early on Thursday in an area where many hi-tech firms have production sites, but there was little effect on operations. While the quake initially caused tech stocks to fall, they remained lower as investors focused on the outlook for demand. The benchmark Taiex share index failed to extend its gains in fifth session as it ended the day lower by 59.72 points or 0.78% at 7569.80.

In India, key benchmark indices ended with small losses after witnessing intraday volatility. Fears of rise in interest rates following rise in food inflation weighed on the sentiment. Weak global cues played the spoilsport after strong gains on the domestic bourses over the past three trading session. Firm global stocks had aided the rally on the domestic bourses recently. The Sensex fell below the psychological 17,000 mark. It had settled a tad above the 17,000 level on Wednesday, 3 March 2010. The BSE 30-share Sensex was down 28.31 points or 0.17% to 16,971.70. The S&P CNX Nifty was down 7.85 points or 0.15% to 5080.25.

Elsewhere, Malaysia's Kula Lumpur Composite index finished was little changed at 1284.09 while stock markets in Indonesia's Jakarta Composite index gave up by 1.44 points ending the day lower at 2565.64.

In other market, European shares traded lower, declining after four sessions of gains, with investors still cautious about Greece's fiscal position as they wait for interest rate decisions from two of the region's top central banks. On the regional level, the U.K. FTSE 100 index declined 0.4% to 5,512.96, the German DAX index lost 0.7% to 5,779.74 and the French CAC-40 index lost 0.6% to 3,818.80.