Select markets down in Asia

US economic worries hurt the sentiments, key data releases ahead also keep buying under check



Asian stocks ended mixed with a slightly bearish bias today on weak overnight cues from the US markets and cautiousness ahead of the key interest rate decision from the European Central Bank tomorrow. There are worries that the US Fed might resort to quantitative easing in near term as it tries to claw its way out back to a steady recovery. The US markets lost out yesterday after excellent gains on Monday when the DOW hit its two and half month highs. The US National Association of Realtors (NAR) stated yesterday that its Pending Home Sales Index dipped by 18.6% in June on year- its lowest level in 9 years

The Japanese stocks closed in red as weak overnight US cues and the relentless strength in the Japanese currency took a toll on the market. The Yen surged to a 15-year high against the dollar, hurting the country's big exporters. The benchmark Nikkei 225 Index shed 204.67 points, or 2.1%, to 9489, while the broader Topix index of all First Section issues was down 13.25 points, or 1.5%, to 846.

On the economic front, data revealed that activity in the Japanese service sector contracted unexpectedly in July. The Markit / Nomura business activity index fell to 46.3 from 47.1 in the previous month. A reading above 50 indicates expansion while one below suggests contraction. The rate of decline was slower than the long-run series average, despite quickening to the most marked in the current 3-month period of contraction.

The Australian market eased as negative cues from the overnight US stocks and lack of cues from the Asian markets led to some profit selling. The benchmark S&P/ASX200 Index had rallied to a 6 week closing high yesterday and bull's early attempt to pull back the index above 4600 levels failed, pushing the stocks lower throughout the day. The benchmark S&P/ASX200 Index declined 29.50 points, or 0.65%, and closed at 4542 points, while the All-Ordinaries Index ended at 4,560, representing a loss of 26.80 points, or 0.58%.

On the economic front, Australia's trade surplus soared to a record high in June, on strong exports of commodities such as coal and iron ore. As per the data, the trade balance recorded a surplus of A$3.5 billion in June compared to the revised A$1.8 billion surplus in the previous month. Exports of goods and services rose 7% in June from May to A$26.7 billion, while Imports, on the other hand, were more or less unchanged from previous month.

In China, the stocks managed to close slightly up after yesterday's losses. The index-linked counters slid lower for a second day as poor US economic numbers hurt the sentiments. Investors shifted their focus to the soaring inflationary expectations and questioned the ability of policymakers to ease loan and property curbs despite the recent moderation in the country's manufacturing activity. However, a recovery was witnessed in the market after the Shanghai Composite Index bounced back above the key 2600 levels in the closing hours. The index closed at 2638, up 1.52 points or 0.44% on the day.

In Mumbai, the stocks managed to end strong. The key benchmark indices surged to their highest level in 2-1/2 years in late trade on strong services sector data and revival of monsoon rains in the crucial sowing month of July 2010. Data showing sustained buying by foreign funds over the past two months, underpinning sentiments. As per provisional figures, the BSE 30-share Sensex closed up 108.15 points or 0.6% to 18,222.98. The Sensex rose 134.63 points at the day's high of 18,249.46 at the fag end of the trading session, its highest level since 19 February 2008. The S&P CNX Nifty was up 30.35 points or 0.56% to 5,469.90 as per provisional figures. It hit high of 5481.90, its highest since 5 February 2008.

In other markets, the Hang Seng index in Hong Kong edged gained 0.43%, the TSEC index in Taiwan added 0.19% while Straits Times index in Singapore lost 0.43%.

US dollar hovered just above 1.3200 levels against the Euro after tumbling to a three-month low yesterday. The currency was last seen quoting at 1.3218. The DOW futures were lower, last indicating that the DOW could open 20 points lower. Crude oil surged to a high of $82.46 per barrel and currently trades at $82.24, down 31 cents from the previous close. Some selling is emerging in the commodity on higher levels as the markets wait for the US weekly inventories data