Bearish week extends for Asian stocks

Markets at unease by Fed statement, weak housing data from the US

Asian stocks ended mostly lower as a bearish week continued. The sentiments were largely mixed in cautious trading as the strength in the US dollar and worries over the global economic recovery kept the buying activity under check. DOW futures fell sharply in the afternoon, keeping possibilities of major gains in Asian shares limited. The markets eyed dovish language in the FED statement yesterday. The US Fed kept its rates near zero percent as widely expected but stated that financial conditions have become less supportive of economic growth.



Adding to the worries, the U.S. Census Bureau said that new home sales were at an annual rate of 300,000 in May, down 32.7% from April's pace and much less than expected. It was the lowest month for new home sales since records began in 1963. So far in 2010, new home sales are up 6% from a year ago.

Asian markets were nervous in the early moves and the Japanese stocks rose slightly, though the early gains provided by a boost in the exports were short lived and the 10000-point mark acted as a stiff barrier for the benchmark Nikkei 225 stock index. The market edged up just 4.64 points, or 0.1%, to close at 9,928.34 in the end.

Exports from Japan rose 32.1% to 5.31 trillion yen (59 billion dollars), the sixth consecutive monthly rise. Shipments of cars, steel and electronic components surged in May but the overall increase in exports was below the increase of more than 40 % registered in each of the previous four months.

The trade surplus reached 324.2 billion yen in May, the 12th straight month of improvement on year-earlier levels but below the market forecasts of more than 450 billion yen.

Aussie stocks dipped right from the start as Prime Minister Kevin Rudd stepped down and Julia Gillard took over the leadership as the first female Prime Minister for the country. Mining related stocks advanced on speculation that the new PM will reconsider the super tax but the overall momentum was lax. The benchmark S&P/ASX200 Index dropped 6.40 points, or 0.14% and closed at 4,480, while the All-Ordinaries Index ended at 4,504, representing a loss of 5.30 points, or 0.12%.

On the economic front, a report released by the Conference Board revealed that its Leading Economic Index for Australia increased 0.1% in April. The private sector agency further revealed that its Coincident Index also rose 0.1%.

Chinese stocks ended lower as lack of buying made investors book profits as the key 2600-point levels neared for the Shanghai Composite. The index closed down 0.1% to 2566.74 in thin volume.

In Mumbai, stocks fell in tune with the global cues. Immense volatility was witnessed in late trade as traders rolled over positions in the derivatives segment from the near-month June 2010 contracts to July 2010 contracts. The near-month June 2010 derivatives contracts expired today, 24 June 2010. The BSE 30-share Sensex was provisionally down 72.53 points or 0.41%, off close to 160 points from the day's high and up close to 50 points from the day's low.

In other markets, South Korea's Kospi gained 0.8 %; Hong Kong's Hang Seng eased 0.69% while Singapore shares dropped 0.82%. However, Taiwan shares closed up 0.1 %.

In the U.S., stocks ended Wednesday' session mixed, as volatility following some troubling economic commentary from the Federal Reserve and dismal new home sales figures rocked trader sentiment. The Dow crawled up 4.92 points or 0.1% to 10,298, while the Nasdaq slipped 7.57 points or 0.3% to 2,254 and the S&P 500 dropped 3.27 points or 0.3% to 1,092.

In currencies, the US dollar firmed up to a high of 1.2268, extending its upbeat run from a five-week lows and kept crude and other commodities under check. The DOW futures slipped 56 points and indicated the stocks are heading nowhere but down as the weak array extends for the world equities. Stocks have been pressed lower after a Chinese Yuan float fuelled rally in the first session of the week.