Asian markets eke out small gains

Euro surges above 1.2400 after tumbling to four year lows yesterday

Asian stocks eked out small gains as risk appetite continued to assist sentiments after the steep losses for the world equities in the last few days. The overnight US cues were flat but the Asian investors eyed an impressive intraday recovery in Dow, which rallied primarily on upbeat data about the housing sector. US Home-builder sentiment rose in May to the highest level in nearly 33 months, boosted by a homebuyer tax credit and strengthening economy, the National Association of Home Builders started yesterday. The commodity prices also rebounded today, as the Euro ticked above 1.2400 mark and supported resources.

Japanese market ended slightly higher. Benchmark Nikkei-225 Index ended in green while the broader Topix Index ended in negative territory with modest losses. Positive closing on Wall Street in the previous session and modest recovery in Euro against the yen attracted buying interest in select stocks, while the fear continues to haunt investors, who have moved to sidelines awaiting more cues. The benchmark Nikkei 225 Index rose 6.88 points, or 0.1%, to 10,243, while the broader Topix index of all First Section issues slipped 6.52 points, or 0.7%, to 914.

On the economic front, results of a monthly survey conducted by Cabinet Office revealed that consumer confidence in Japan improved to 42.1 in April from 41 reported in the previous month. The results further noted that households' consumer confidence rose to 42 in April from 40.9 reported in March. Both the indices matched economists' forecast. Among the sub-indices of households' consumer sentiment, overall livelihood climbed to 42.4 from 41.2. Income growth and employment rose to 40.4 and 38.3, respectively.

In a separate report, the Ministry of Economy, Trade and Industry revealed that an index measuring tertiary industry activity in the country declined a seasonally adjusted 3.0% in March, coming in at 95.5. That was sharply lower than forecasts that had called for a 1.2 % contraction following the 0.2 % decline in February.

The Australian stocks mixed, finding buying interest as the Australian interest rates appeared to be "well placed for the present," as noted in the latest minutes of the Australian central banks. Following the decision this month to hike rates for the third time this year, the Reserve Bank of Australia noted that members judged it to be prudent to undertake some further monetary tightening at this meeting. The benchmark S&P/ASX200 Index added 3.50 points, or 0.08% to 4,470, while the All-Ordinaries Index ended at 4,500, representing a loss of 0.70 points, or 0.02%.

The minutes of the recent monetary policy meeting of the Reserve Bank of Australia revealed that members of the policy board felt that a rate increase was warranted given a faster than expected pick up in inflation and improving economic conditions. The members also hinted that the tightening cycle might now be heading for a pause with interest rates around average levels. The Reserve Bank board saw the decision to raise the cash rate by a quarter %age point to 4.50% to be "prudent". The board noted that, "if lenders responded as expected to another rise in the cash rate, interest rates faced by most borrowers would then be at around their average levels over the past decade".

In a separate report, the Housing Industry Association and the Commonwealth Bank revealed that housing affordability in the country continued to fall in early 2010. According to the data, home affordability fell 4% in the March quarter compared to the December quarter, and on annual basis, down 28.7% from the same quarter last year. On a quarterly basis, housing affordability was down by 4.2% in the capitals and by 5.3% in regional areas, the data further revealed.

Chinese markets jumped on bargain hunting. China's key stock index ended 1.4 % higher, bouncing from a fresh one-year intraday low hit during as property and banking stocks staged a technical rebound. The Shanghai Composite Index closed at 2,594.8 points, rebounding from Monday's 5 % slide, its biggest one-day %age drop in more than eight months, as retail investors fled the market. The property sub-index jumped 5.6 %.

In Mumbai, the strength in small cap stocks made markets turn around from early lows. The BSE 30-share Sensex was up 44.30 points or 0.26% to 16,879.86 by the close. The Sensex rose 164.78 points at the day's high of 17,000.34 in afternoon trade. The index fell 91.13 points at the day's low of 16,744.13 in early trade. The S&P CNX Nifty was up 7.50 points or 0.15% to 5,067.40 as per provisional figures

In other markets, Hong Kong's Hang Seng added 1.17%, Singapore's Straits Times edged up 0.38% while Taiwan's TSEC ended down 0.18%.

The risky assets drove higher with steady gains in crude oil and copper today. US stock futures are indicating that the DOW could open as high as 46 points. Crude oil added tremendous gains, as traders flocked to the commodity after prices briefly fell under $70 per barrel mark yesterday. Light sweet crude oil futures for June delivery trade $71.91 a barrel in electronic trading, up $1.83 per barrel from previous close at $70.08 a barrel in New York on Monday.