Select markets eke out small gains in Asia

Some bounce back in risk appetite after Ben Bernanke says that the outlook for the US economy is "unusually uncertain"



Asian markets had a mixed outing with a few markets eking out gains despite the negative overnight US cues amid ideas that a strong earnings season would continue and the resources gained on strong commodity prices. Euro stayed higher today, while DOW futures also added nearly 100 points in the London trades, limiting the losses for Asia after a late sell off in the Dow Jones index yesterday. The US Federal Reserve Board Chairman Ben Bernanke stated that the outlook for the US economy is "unusually uncertain" in written testimony delivered before the Senate Banking Committee yesterday. Bernanke also stated that the Fed is willing to do more if growth proves to be weaker than forecast. This was well in line with the expectations but the responses of the Fed Chief in the much awaited question-and-answer session highlighted that the FED has turned a little more dovish than say around a couple of months back. This pulled Dow down by around 100 points by the close.

Asia investors started nervously on these cues. The Japanese stocks closed in red with the continuing strength of the local currency, the Yen, against the US dollar hurting the exporters. The benchmark Nikkei 225 Index shed 57.95 points, or 0.62%, to 9,221, while the broader Topix index of all First Section issues was down 3.87 points, or 0.47%, to 825.

On the economic front, a report released by the Ministry of Trade, Economy and Industry in Japan revealed that all industry activity unexpectedly increased in May. The report however noted that the growth rate in all industry activity slowed down to 0.2% month-on-month during May, following a sharp 1.9% growth in April. Economists were anticipating for a 0.4% fall in all industry activity for the month. Among the major sectors, the report noted that, construction activity surged 8.9%, reversing prior month's 4.4% drop.

The Australian market gave up some of the gains in the last two days and closed in negative territory, taking cues from Wall Street where the major averages ended in negative territory. Resources edged up as copper prices tested four-week highs on COMEX but the Banking stocks led the decline amid concerns about their exposure to the property market. The benchmark S&P/ASX200 Index ended down by 38 points, or 0.86%, at 4375, while the All-Ordinaries Index ended at 4,395, representing a loss of 33.90 points, or 0.77%.

On economic front, a report released by National Australia Bank revealed that business confidence in the country declined sharply in the June quarter, led by global uncertainty and the unpopular resources super tax. The National Australia Bank business confidence index stood at 3 in the June quarter, sharply down from 17 reported for the March quarter. The report revealed that confidence was weakest in construction, recreation and wholesale sectors, while it was strongest in mining, manufacturing and finance.

Chinese stocks went up for a fourth day today as ideas that slowing economic growth will prompt the government to relax property curbs and allow more bank lending spurred good buying. The Shanghai Composite Index finished at 2,562.4 points, adding 1.1%, led by steel issues as mainland steel prices rose this week after a three-month slump and real estate shares climbed on reports a property tax would be levied later than expected.

In Mumbai, frenzied buying during the latter part of the trading session as European stocks and US index futures surged. The barometer index BSE Sensex crossed the psychological 18,000 mark with auto, metal and banking stocks in demand. European shares surged as German and French purchasing manager' index readings for July 2010 beat forecasts. The BSE 30-share Sensex was up 114.61 points or 0.64% to 18,091.84, as per provisional closing. The Sensex rose 150.67 points at the day's high of 18,127.90 in late trade. The index lost 97.35 points at the day's low of 17,879.88 in morning trade. The S&P CNX Nifty was up 37.90 points or 0.70% to 5,437.25 as per provisional closing.

In other markets, Hong Kong's Hang Seng added 0.50%, while South Korea's Kospi index shed 0.76%. However, Singapore's Strait Times edged up smartly by 1.1%.

Dollar lost out today following. The greenback fell after making early gains. The currency is trading at 1.2862 right now. DOW futures are up 117 points while Crude oil prices are up 36 cents at $76.92. Oil had earlier rose to a high of $77.24 per barrel. Gold rose in intraday moves but the volatility was very high and the commodity was pushed back. COMEX Gold futures were last seen quoting at $1186, down $5.80 per ounce from the previous close.