Mixed start for Asia

Caution rules the roost as sentiments seen uncertain in first session of the week

Asian markets ended mixed in choppy trades as the traders tried to assess the precise damage inflicted by the last week's US Fed action and the weak economic releases. Chinese stocks edged up amid volatile action in the currency markets as traders continued to believe that the Asian economy is headed for a soft landing. The US dollar rose slightly in the early Asian trades but then gave up in London trades.



The Japanese stocks closed in red as continued appreciation in the Japanese Yen hurt exporters while a weaker than expected GDP data also kept the sentiments under check. The domestic economy, according to preliminary reports, grew 0.4% on annualized basis in the second quarter, compared to 4.4% growth achieved in the first quarter. The benchmark Nikkei 225 Index dropped 56.79 points, or 0.6%, to 9197, while the broader Topix index of all First Section issues was down 2.61 points, or 0.3%, to 829.

A preliminary report released by the Cabinet Office revealed that Japan's gross domestic product added just 0.1% in the second quarter of 2010 compared to the previous quarter, following a revised 1.1% growth in the first quarter. On an annualized basis, GDP for the quarter was up 0.4%, missing forecasts for a 2.3% increase following a revised 4.4% gain in the first quarter. The report further noted that nominal GDP declined 0.9% on quarter and 3.7% on annualized basis.

The Australian market closed in negative territory as well, though a steady recovery was noted in the market throughout the day. Weak economic data on vehicles sales clubbed with last week's poor labor market statistics fueled hopes of the central bank not resorting back to its momentary tightening mode anytime soon and index linked counters edged up as the benchmark S&P/ASX200 Index broke above 4440 mark. The index dropped 21.10 points or 0.47% on closing basis to end at 4,438 points. The All-Ordinaries Index closed at 4,465, representing a loss of 15.50 points, or 0.35%.

On the economic front, a report released by the Australian Bureau of Statistics revealed that the sale of new motor vehicles in the country declined a seasonally adjusted 2.6% in July coming in at 85,019. In the previous month, the sales declined a revised 1.4%, the report added. On an annual basis, sales rose 11.6% in July following 7.8% gain in the previous month. Sale of passenger vehicles declined 4.3%, and sale of other vehicles were down 4.2%. However, sale of sports utility vehicles increased 3.2%, the report added.

Chinese stocks raced up in style though. The last week's softening economic numbers, particularity the industrial production figures which rose at the weakest pace in 11 months, augured well for the stocks. The sentiments were further spurred after Agricultural Bank of China stated that it fully exercised the over allotment option for the Shanghai portion of its initial public offering. The benchmark Shanghai Composite Index, which tracks both A and B shares, rose 2.1% to 2661.71. The Shenzhen Composite Index rose 2.3% to 1128.02.

In Mumbai, the key benchmark indices edged lower on the first day of the week on doubts over global economic recovery. European stocks and US index futures edged lower. The BSE Sensex closed above the psychological 18,000 mark after falling below that level for a brief period in mid-afternoon trade. IT, Realty and metals stocks fell. Index heavyweight Reliance Industries (RIL) edged lower. The market breadth was weak, in contrast with a strong breadth earlier in the day.

As per provisional figures, the BSE 30-share Sensex was down 128.64 points or 0.71% to 18,038.39. At the day's high of 18,203.92 hit in mid-morning trade the index rose 36.89 points. The index fell 169.57 points at the day's low of 17,997.46 in mid-afternoon trade. The S&P CNX Nifty was down 34.70 points or 0.64% to 5417.40 as per provisional figures

In other markets, the Hang Seng index in Hong Kong edged up by 0.19% while TSEC in Taiwan also rushed up by 0.63%. However, Strait Times index in Singapore slid lower by 0.22%.

Dollar fell above 1.2800 levels against the Euro before eking out some gains. DOW futures stayed in and out of positive territory and currently quote down 16 points. Light sweet crude oil futures for September delivery trade at $75.75 a barrel in electronic trading, up 36 cents per barrel from previous close at $75.39 a barrel in New York on Friday. The counter had hit a high of $75.95 per barrel.