China effect pushes Asia higher

Dollar slides, commodity prices soar on the first session of the week

Asian markets ended mostly higher today as the global risk appetite stayed strong amid falling US dollar and strong commodity prices. Investors eyed the strong pick up in China's purchasing managers' index and looked ahead for possible new monetary stimulus from the U.S. Federal Reserve, which would keep the global liquidity conditions easy. The Fed is expected to unveil a new round of bond purchases, also known as quantitative easing, at this week's policy-setting meeting on November 2-3 to bolster the economy. The US Stocks were little changed in the last session. Dow rose 4.54 points to 11,118.49 After the US Commerce Department said that gross domestic product increased at an anemic annual rate of 2.0% in the third quarter following the 1.7% growth that was seen in the second quarter.



The Japanese stocks started on a frail note though and slipped on the poor US GDP figures. Exporters took a beating on slack overseas demand and the continued appreciation in the value of the Japanese yen also kept the momentum sluggish. Yen once again neared around 80 per US dollar levels and kept the buyers aside even as the rest of the Asian markets gained on strong Chinese data. The benchmark Nikkei 225 index dropped 47.73 points or 0.52% to close at 9,154.72- its seven week closing low.

On the economic front, the Japan Automobile Dealers Association stated that the auto sales in Japan had plunged 26.7% in October from a year earlier, due to the expiration of government subsidies and tax breaks on purchases of eco-friendly vehicles.

The Australian stocks were in a good touch following the strong Chinese data and rising commodity prices also helped lift the sentiments. The stocks were mixed at the open but gained strength as the day proceeded and the gained in the other Asia markets intensified.
The stocks wiped out losses in the last session as banks and miners added impressive gains. The benchmark S&P/ASX 200 index climbed 36.91 points or 0.79% to end at 4,698.50.

Chinese stocks continued to gain, carrying the recent momentum buoyed by solid manufacturing data. China Federation of Logistics and Purchasing stated that the Purchasing Managers Index of the country's manufacturing sector rose to 54.7 percent in October, suggesting increased inflationary pressures in the near term. This was the 20th month for the index to record levels above 50- a sign of expansion. The benchmark Shanghai Composite Index was added 75.19 points or 2.52% close at 3,054.02.

In Mumbai, the markets turned sharply higher in the afternoon, with strong global cues, as investors awaited Reserve Bank of India's credit policy announcement tomorrow. The manufacturing sector expanded in October 2010 at a much faster pace than in September 2010, supported by strong output and a sharp rise in new business, a purchasing managers' index (PMI) showed on Monday, 1 November 2010. The HSBC Markit PMI, based on a survey of 500 Indian companies, rose to 57.2 in October 2010 from 55.1 in September 2010 and 57.2 in August 2010. New orders climbed for the 19th month in a row and at a faster rate than in September 2010. The 30-share BSE Sensex added 323 points or 1.61% to close at 20,356. The broader Nifty added about 100 points or 1.66% to end at 6,118.

In other markets, the Hang Seng index in Hong Kong soared 2.41%, the TSEC index in Taiwan added 1.12% while the Straits Times index in Singapore jumped 1.58%. The US dollar slumped against the Euro, testing lows of 1.4000.