Asian markets end mixed in thin trading

Fed keeps the door open for more quantitative easing in the near term, dollar drops heavily

Asian markets ended mixed today amid thin trading as traders considered the latest Fed statement and the across the board drop in the US dollar kept risk appetite supported. The gains were limited though as the markets considered the fragile stat of the world economy. Yesterday, at the end of their one-day policy meeting, US Fed kept its benchmark rates near zero percent as expected and stated that the economy's recovery from a deep recession is likely to be modest in the near term. The Fed also kept the door open for more quantitative easing in the near term.



In their statement, the Fed officials said they are "prepared to provide additional accommodation if needed to support the economic recovery and to return inflation, over time, to levels consistent with its mandate." While the US markets initially rallied following the Federal Reserve's interest rate announcement, stocks were unable to sustain the upward move and slid back to the downside going into the close, ending the day mostly lower. The major averages ended the session on opposite sides of the unchanged line, with the Dow posting a modest gain. The Dow inched up by 7.41 points or 0.1 percent to 10,761.03, while the Nasdaq slid by 6.48 points or 0.3 percent to 2,349.35 and the S&P 500 declined by 2.93 points or 0.3 percent to 1,139.78.

Japanese markets moved lower for a second successive day as the investor sentiment was dampened following the U.S. Federal Reserve Chairman Ben Bernanke hinting at lower growth projections and possible quantitative easing. The exporters also continued to drop on signs of weak global demand and signs of trade friction with China. The Japanese yen rose to highest level since Japan's latest intervention into the forex market to stem the yen 's rise. Japan's strong currency continues to hamper the nation's export- led recovery, which toppled in the last quarter. The benchmark Nikkei stock index dropped 35.79 points or 0.37% to close at 9566.32.

The Australian market closed in green with modest gains though the overall undertone was lackluster. Nothing much was up on the corporate front and mining stocks continued to retreat on profit taking. The benchmark S&P/ASX200 Index gained 7.70 points, or 0.17% to close at 4,625 points, while the All-Ordinaries Index ended at 4,675, representing a gain of 9.80 points, or 0.21%. On the economic front, a report released by Westpac Bank in association with the Melbourne Institute revealed that a leading indicator of the Australian economy continued to rise in July, though the pace of growth slowed down. As per the report, the leading index rose 6.8% on an annualized basis in July, well above the long term trend of 3.2%, but slower than June's 7.4% rise.

In Mumbai, key benchmark indices ended lower, ending a three-day winning streak with negative global cues playing the spoilsport. High volatility was the hallmark of the day's trading session. Both the BSE Sensex and S&P CNX Nifty slipped below the psychological levels of 20,000 and 6,000 respectively in mid-morning trade, after trumping them to scale a 32-month peak in opening trade. The BSE 30-share Sensex was provisionally down 87.45 points or 0.44% to 19,914.10.

In other markets, Hang Seng index in Hong Kong added 0.21% while Straits Times index in Singapore jumped 0.71%. Markets in China and Taiwan were closed today. The US dollar fell near a five month low near 1.3400 against the Euro as traders contemplated the FOPMC moves. Dow Futures are mostly lingering in red. The benchmark WTI futures rose above $75 per barrel and currently trade at $75.32, up 35 cents on the day. Gold continued to be a direct beneficiary of the dollar woes, hitting fresh highs above $1290 per ounce.