Risk element afloat in Asian stocks

Markets end mixed in a choppy session ahead of weekends

The Asian markets ended mixed ahead of the weekends, not being able to post much of gains as the Dollar appreciated under 1.2400 and the DOW futures dillydallied between positive and negative territory. The pessimistic US data curbed the buying enthusiasm triggered by yesterday's reports of Spanish Treasury raising 3.479 billion euros in a bond sale. The markets had a typically lackluster outing and a correction in crude oil and commodities kept the risk element afloat in the asset markets.



The Japanese stocks closed the session in negative territory on stronger local currency against the US dollar. The benchmark Nikkei 225 Index fell 4.38 points, or 0.04%, to 9,995.02, while the broader Topix index of all First Section issues fell 2.84 points, or 0.3%, to 885. Exporters were kept under check with traders selling after the mid week gains.

On the economic front, minutes of the recent monetary policy board meeting revealed that the members of the board reiterated that the bank would continue extremely easy monetary policy for the time being. At the meeting, the board unanimously held the uncollateralized overnight call rate at the record low of 0.10% - where they have remained since December 2008. The board members emphasized that the new lending policy is temporary, the minutes showed, and it must not affect the bank's interest rate policy. The true indicator or economic recovery, the minutes continued, will be a self-sustaining rebound in domestic demand.

The Australian market closed in green on gains in mining and gold related stocks. Positive closing on Wall Street in the previous session despite weak economic data lifted market sentiment. The benchmark S&P/ASX200 Index advanced 24.60 points, or 0.54% and closed at 4,552, while the All-Ordinaries Index ended at 4,574, representing a gain of 27.10 points, or 0.60%. Gold prices hit highs around $1250 per ounce and consolidated around the same.

US markets were marginally higher yesterday amid weak economic data. New claims for jobless benefits unexpectedly rose last week, for the second consecutive week. The Philadelphia Federal Reserve's June index on manufacturing in the Mid-Atlantic region plunged eight points to 13.4, its lowest level in nearly a year.

Chinese stocks drifted lower as traders continued to sell on the inability of the Shanghai Composite index to break above the 2600 points level. The index dipped 1.84% percent, losing 47.02 points to end at 2,513.22 due to liquidity concerns ahead of Agricultural Bank of China's planned initial public offering. Markets were also pressurized by reports that the World Bank urged China to raise interest rates to cap rampant borrowing and rein in soaring house prices, which it warned could throw the economy off the rails.

In Mumbai, the key benchmark indices slipped to the day's low in late trade as shares from Mukesh Ambani and Anil Ambani pack extended losses after Mukesh Ambani gave no details of reconciliation between the two brothers at Reliance Industries' (RIL) annual general meeting. The market breadth was weak in contrast to a strong breadth earlier in the day. The BSE 30-share Sensex was provisionally down 73.14 points or 0.42%, off 178.44 points from the day's high and up 18.26 points from the day's low.

In other markets, Indonesian stocks rose 1.33% while the Malaysian markets added 1.01% and Hong Kong stocks gained 0.74%. Markets in Singapore and Taiwan dropped 0.37% and 0.30% respectively.

In commodities, light sweet crude oil futures for July delivery slid by more than a dollar to a low of $75.56 per barrel in electronic trading. Copper also drifted lower while Gold stayed afloat and hit fresh highs above $1251 per ounce.