Asian equities frown at Bernanke

Traders' eyed continued worries about the global economic prospects, Egypt crisis refuses to wane

Asian markets ended mostly in red today, giving up in late moves in a session which was similar to yesterday as the traders eyed continued worries about the global economic prospects and Egypt crisis refused to wane. The economic recovery appears to have strengthened in the past few months, but unemployment rate remains too high to consider the recovery established, noted US Fed Chairman Ben Bernanke in remarks prepared for testimony to the US House of Representatives' Budget Committee. He also stated that the unemployment would stay high for some time.



This made investors nervous about the state of the current recovery despite the leading indicators providing a comforting picture. The conditions in Egypt remained tenuous as the all-pervasive public uprising was bolstered by labor strikes and worker protests across the country. Media reports quoted a senior official in President Hosni Mubarak's government as saying the army would intervene to control the country if conditions worsen further. In overnight trades, the US stocks closed almost flat with Dow adding 6.74 points or 0.1% to close at 12,339.89 while Nasdaq and the S&P 500 ended in red.

This made investors nervous and losses gripped the stocks across the region. In Japan, weak overnight cues hurt the investors' sentiments even as a report released by the Cabinet Office revealed that core machinery orders rose a seasonally adjusted 1.7% in December compared to the previous month, rising for the first time after three straight months of decline. Investors remained on the sideline ahead of Japan's October-December gross domestic product data due Monday. The market is closed for a public holiday tomorrow, ensuring that bargain hunting did not find any place in a typically bearish session today. The benchmark Nikkei 225 Index dropped 12.18 points, or 0.11%, to close at 10,605.65.

In Australia, markets ended slightly higher though the resources were pressed hard on the sell off in industrial metals. On the economic front, a report released by Australian Bureau of Statistics revealed that the unemployment rate in the country remained unchanged in January, at a seasonally adjusted 5.0%. Australia added 24,000 total jobs in the month, blowing past expectations for a gain of 17,500 jobs after adding 2,300 jobs in December. The benchmark S&P/ASX200 Index edged up by 9.60 points, or 0.20% to close at 4,914.40 points.

In China, the markets seemed to have absorbed the latest rate hike perfectly and steady buying emerged right from the start. The automakers had a good time following strong January sales. With nothing much on the economic calendar, the Shanghai Composite Index logged a gain of 45.00 points or 1.62% to close at 2,819.06.

In Mumbai, the key benchmark indices edged lower in choppy trade, falling for the third straight day, on weak global stocks. Reliance Infrastructure jumped more than 8% after the company on Wednesday said the board would consider buyback along with Q3 results on 14 February 2011. Index heavyweight Reliance Industries (RIL) edged lower in volatile trade. IT and some realty stocks were weak. Healthcare and auto stocks rose. Banking stocks were mixed. As per provisional figures, the BSE 30-share Sensex was down 133.13 points or 0.76% to 17,459.64. The Sensex lost 230.18 points at the day's low of 17,362.59 in mid-morning trade, its lowest level since 15 June 2010. The index rose 44.11 points at the day's high of 17,636.88 in early trade.

In other markets, the HangSeng Index In Hong Kong dropped nearly 2%, the Strait Times Index In Singapore shed 1.64% while KOSPI Index in South Korea also plummeted by 1.81%. In commodities, crude oil edged higher, approaching $87 per barrel before a spirited run in the US dollar pressurized the commodities and led the commodity lower. Gold also dropped under $1360 per ounce in the electronic session.