Asian markets witness nervous trading

Chinese monetary tightening moves hurt sentiments, US markets closed for holiday today

Asian equities were locked in a weak to flat trading pattern today as the latest Chinese monetary tightening moves curbed the buying enthusiasm despite huge gains in the US stocks on Friday. The mood was cautious as the US markets are closed today on account of the Martin Luther King Jr holiday. China, late Friday said it would raise banks' reserve requirement ratio by 50 basis points, following six hikes last year. This encountered with the gains in the US markets where strong financials pushed the Dow Jones to its highest since June 2008 on Friday.



The US consumer sentiment in the month of January unexpectedly deteriorated compared to December. Reuters and the University of Michigan consumer sentiment index fell to a reading of 72.7 in January from December's final reading of 74.5. However, the US industrial production increased quite impressively as unusually cold weather boosted utilities output. The industrial production jumped by 0.8% in December following a downwardly revised 0.3% increase in November, marking its fastest pace of growth since July 2010.

Japanese equities ended almost unchanged today, as weak cues from the other markets curbed value buying after a large drop on Friday. Select exporters gained the markets eyed sturdy gains in the US markets in last session. The benchmark Nikkei 225 index closed up 3.82 points or 0.04% at 10,502.86 after briefly falling into negative territory in afternoon trade. In last session, the equities witnessed sustained pressure with the Nikkei moving constantly away from 8-month highs.

The Australian stocks slid lower today, tracking weakness in the global as concerns about potential softening of China's economy made their presence felt. The copper prices drifted lower in global markets while crude oil also extended its drop from 27-month highs in Asia, keeping a tab on the resource sector companies. All minors eased with Macarthur Coal, shedding 1.53%, BHP Billiton giving up 1.2% and Rio Tinto sliding 1.89%. The benchmark S&P/ASX 200 index closed down 38.4 points or by 0.8 points, at 4763.1 points.

In China, stocks were in a free fall right from the start as banking and property counters. The investors eyed the latest moves from the central bank as it tried hard to curb the runaway pressure on the asset prices in the country. The People's Bank Of China announced a 50-basis-point RRR hike for all banks after Chinese markets closed last Friday. The benchmark Shanghai Composite Index dropped to 2,704.5 points by 064.

In India, ended marginally higher amid a highly volatile trade. Volatility ruled the roost as the key benchmark indices regained positive after slipping into the red for a brief period in mid-afternoon trade. Anil Dhirubhai Ambani Group (ADAG) stocks tumbled after the Securities and Exchange Board of India (Sebi) after trading hours on Friday, 14 January 2011, passed a consent order with regard to its probe into possible violation of securities market norms by Reliance Infrastructure (R-Infra) and Reliance Natural Resources (RNRL). IT stocks surged while Realty and metal stocks fell. The BSE 30-share Sensex ended up 21.81 points or 0.12% at 18882 points, coming off its four month lows though the sustained bout of selling pressure witnessed on rise indicated that the underlying sentiments remain wounded following the radical rise in inflation.

In other markets, the Straits Times in Singapore dropped 0.23%; Seoul Composite in South Korea shed 0.39% while the Taiex in Taiwan pared 0.83%. US dollar gained sharply today, rallying on the back of the strong economic data and kept commodities under check. Oil has dropped on weak equities and profit selling at 27-month highs on Friday and continued to trend lower today. The commodity quotes at $91.05 per barrel, down 49 cents on the day.