Asian stocks mostly end weak

Markets price in Chinese rate hike, utterly bearish cues from the US markets also clutter sentiments

Asian markets mostly ended lower today, as the utterly bearish cues from the overnight US markets hurt the sentiments and the full impact of Chinese rate hike yesterday was factored in. The markets started on a tentative note and were mired mostly in negative territory throughout the day though modicum of buying emerged as the session progressed. The investors seemed to be buying into dips as the attractiveness of Asia as an investment destination remains in tact. Markets also eyed the yesterday's forecast from the World Bank, which raised its growth forecast for East Asia's developing countries. The bank also said that governments in the region needed to control rising risks from surging capital inflows and currency strains. Output has rebounded to above pre-crisis levels and regional growth should hit 8.9 %this year, up from a previous forecast of 8.7 percent, the bank said. Last year's expansion was 7.3 percent.



China hiked its one-year benchmark deposit rate to 2.50% from 2.25% and the one-year lending rate to 5.56% from 5.31% yesterday. The move marked the first rate change for the world's second largest economy since December of 2007. US stocks posted their biggest loss in two months with DOW dropping 165.07 points or 1.5% to close at 10,978.62.

Japanese stocks fell sharply, as the investors sold off after a recent session yesterday and most regional markets dropped. Investors fretted about China's surprise interest rate hike while the renewed worries about the foreclosures at several large US banks also hurt the sentiments. The Nikkei 225 average slumped 1.57.85 points or 1.65% to 9,382, plummeting to a two-week low.

The Australian equities also eased following a massive correction in commodity prices yesterday and a rising interest environment in China, the biggest commodity-importing nation, augured negative for the economy. The benchmark ASX 200 index fell 30.80 points or 0.66% to close at 4,624.9. On the economic front, the annualized growth rate of the Westpac-Melbourne Institute leading index was 5.3% in August, well above its long-term trend of 3.1%. However, the index, which indicates the likely pace of economic activity up to nine months into the future, has now dropped for five months in a row from a peak of 10.5%.

In China, the markets rose during mid session, reversing its earlier losses and ended slightly higher as coal stocks gained. The interest-rate hike seemed to have augured as a necessary factor from the point of view of controlling inflation and prevent an asset-price bubble. The benchmark Shanghai Composite Index added 2.10 points or 0.07% to close at 3,003.95.

In Mumbai, Immense volatility was witnessed as the key benchmark indices extended losses to slide to the day's lows in late trade. The key benchmark indices slipped into the red after a sharp rebound from lower that pushed the market to the day's high in mid-afternoon trade. The BSE Sensex and the 50-unit S&P CNX Nifty fell below the psychological 20,000 and 6,000 levels respectively. A strong response to the initial public offer of Coal India means that inflows into the secondary equity market might be hit in the short-term. As per provisional closing, the BSE 30-share Sensex was down 111.48 points or 0.56% to 19,871.65. The S&P CNX Nifty was down 42.80 points or 0.71% to 5,984.50.

In other markets, the Hang Seng index in Hong Kong shed 0.87%, the Straits Times index in Singapore lost 0.41% while the TSEC index in Taiwan added around 1%. Dollar lost a little after rising to two-week highs against the Euro yesterday and hovered above 1.3800 today. Crude futures rose modestly after tumbling $3.59 or 4.3% on the New York Mercantile Exchange overnight. The commodity was last seen quoting at $80.94, up 78 cents from the previous close.