Asian Markets Bow Down To Welcome Obama
Stock markets in Asian region closed sharply lower on Tuesday 20 January 2009, following the negative cues from European markets overnight, as the U.S. markets were closed on Monday for a holiday. Banking and financial stocks closed sharply lower on renewed concerns about the global financial sector, while commodity stocks slid on lower commodity prices.
The European markets fell on Monday, as Royal Bank of Scotland led banking stocks lower after saying it expects to post a loss of as much as GBP28 billion for 2008.
The U.S. markets were closed on Monday in observance of the Martin Luther King Jr. day holiday.
In the commodity market, crude oil fell below $35 a barrel in New York on concern a global recession may deepen after the U.K. bailed out banks for the second time in three months.
Slowing world demand, reduced tension in the Middle East and settlement of Russia's gas dispute with Ukraine could push prices toward last month's four-year low of $32.40, Goldman Sachs Group Inc. said yesterday. The British Treasury authorized the central bank to buy toxic assets and increase its stake in Royal Bank of Scotland Group.
The light, sweet crude oil futures for February slid to nearly a year low of $33.89 per barrel and currently trade at $33.20, down $3.31 per barrel from the previous close. Yesterday's trades will be booked today for settlement.
Brent crude oil for March settlement fell as much as $1.05, 2.36%, to $43.45 a barrel on London's ICE Futures Europe exchange. The contract fell $2.07, or 4.4%, to $44.50 a barrel yesterday.
Coming back in equities, Japanese stock markets closed lower as banking and financial stocks tanked deeper as investors sentiments remain jittery about economic and financial health of global economy, while stronger yen against major currencies pressed down exporters and automakers. After opening negative the Nikkei 225 Stock Average index closed down by 191.06 points, or 2.3%, to 8,065.79, while the broader Topix fell 12.7 points, or 1.6%, to 805.
On the economic front, the Japanese Ministry of Economy, Trade and Industry report said in report that an index measuring service sector activity in Japan was down 0.9% to 107.9 in November compared to the previous month - hitting its lowest value since September 2006, following the revised 0.5% monthly increase in October.
The Cabinet Office said that the Japanese household consumer confidence deteriorated for the third straight month to 26.2 in December from 28.4 in November- the record low figure since April 1982.
In Mainland China, the picture was exactly opposite as the Chinese indices decided not to follow the regional trend by ending the day on higher note after registering losing in the opening session. With this gain the markets has extended their gains for the third consecutive session with gains in heavyweight shares. Shipbuilders and nonferrous metals stocks recovered on hopes of government stimulus aid to deal with the economic slowdown. The benchmark Shanghai Composite Index, which covers both A shares and B shares on the Shanghai Stock Exchange, gained 7.43 points, or 0.4%, to 1,994.1
On the economic front, the Ministry of Human Resources and Social Security (MOHRSS) said that the urban jobless rate rose to 4.2% in quarter ended December 2008 from 4% in September. The slight rise in the jobless rate reflects a slowing economy amid the global financial crisis.
In Hong Kong, the stock markets decided to follow the regional trend as investors decided to book profits ahead of ahead of lunar New Year holiday and persistent worries over corporate earning outlook. The Hang Seng index closed down 380.22 points or 2.85% at 13,255.51. The Hang Seng China Enterprises index slumped 240.27 points or 3.32% at 7,005.88.
On the economic front, Hong Kong's Census and Statistics Department said the seasonally adjusted jobless rate increased to 4.1% in the October to December period from 3.8% in the September to November period.
The underemployment rate rose to 1.9% in the October to December period from 1.8% in the previous three months period. The number of underemployed persons grew to 69,800 from 65,100 in the previous three-month period. Meanwhile, the number of employed persons increased to 3.544 million in the October to December period from 3.533 million in the previous three-months period.
In Australia, the stock markets obeyed the regional trend by snapping two days winning streak as broads based slump across the board. Energy, miners, materials and resources, and financials led the decliners on worries over the health of global financial and economy outlook and falling commodity prices. The benchmark S&P/ASX200 plummeted 112.70 points, or 3.14%, to 3,476.60, while the broader All Ordinaries fell 106 points, or 3%, to 3,425.
Investor's sentiments remain fragile for the whole day on rekindled worries about the economy as Prime Minister Kevin Rudd warned yesterday that the global economic crisis would get worse and signaled that the Government was preparing to announce initiatives to add to the A$36billion of measures it had already undertaken to reinforce the economy.
In New Zealand, the stock market followed the Australian indices dipping further for the second day. The benchmark NZX50 fell down 1.40% or 38.49 points to close at 2709.482. The NZX 15 declined 0.78% or 38.66 points to 4936.959.
On the economic front, New Zealand's CPI dropped down 0.5% during the December quarter as per statistics New Zealand. Lower petrol prices, down 22.4% made the largest individual contribution. The large dip in the inflation numbers gives room for the central bank to further cut rates so as to rescue the country from the global turmoil.
Also, Statistics New Zealand said that food prices dropped 0.2% in December. However for the year, food prices rose 9.1%. After petrol, food prices have been the most significant cause of inflation in the past year.
In South Korea, markets finished lower weighted down by slide in banking and technology stocks. The Korea Composite Stock Price Index finished down 23.84 points or 2.07% closing the day at 1,126.81 i.e. slightly up from the session low of 1,115.07.
On the economic front, data released by Korea Automobile Manufacturers Association showed that auto sales in South Korea fell for the first time in four years in 2008 as demand for new vehicles declined among the global economic slump. Vehicle sales in Korea totaled 1.24 million units for the year, down from 1.25 million in 2007.
In India, the key benchmark index closed lower after opening on a weak note. The BSE 30-share Sensex fell 229.25 points, or 2.46% to 9,100.32, as per provisional closing. The S&P CNX Nifty declined 50.40 points, or 1.77%, to 2,795.80
In Taiwan, the equity indices slumped to a one and half month low, as financial and tourism sector stocks dragged the index lower. The main Taiex share index cast off 124.15 points or 2.84% at 4,242.61 - the lowest closing since 5 December 2008 when it closed at 4225.07.
The market cornered an announcement from Su Chun-bin, spokesman of the Executive Yuan (the Cabinet) that the government may issue consumption coupons for the second time, should the effect of the first issuance on the economic growth proves to exceed 1%
In Philippines, the equities plummeted for the sixth consecutive session bulky losses in the services and mining & oil indices, which dragged the composite index lower. The benchmark index PSEi dived 1.30% or 25.06 points to 1,897.93, the lowest level since 24 December 2008, while the all share index fell 0.24% or 3.02 points to 1,227.73.
In Singapore, the stock market slumped on a broad based slump across the board on worries over the health of global financial and economy outlook and falling commodity prices. The benchmark Straits Times Index erased 23.62 points, or 1.35%, to 1,723.37.
On the economic front, the Monetary Authority of Singapore said it would not consider real estate investment trusts (REITs) to be in breach of borrowing guidelines if debt ratios rise above permitted levels as a result of a decline in property values. According to media news, foreign investment in Singapore is expected to drop by almost half to about S$10 billion in 2009 from S$18 billion in 2009 due to the global credit crunch and the worldwide recession.
Elsewhere, Malaysia's Kula Lumpur Composite index was down 1.11% or 9.91 points to 880.37, while Indonesia's Jakarta composite decreased by 6.54 points or 0.48% to 1344.15. In Thailand, the Thai Stock exchange fell 2.52 points or 0.58% to 433.19.
In other regional markets, the European stocks bucked early expectations for falls by opening cautiously higher. The banking sector retained some calmness after a bad start to the week and some investors were hoping Barack Obama's inauguration as the United States' 44th President will give the markets a fillip, despite the magnitude of his task to revive the world's largest economy. At 0922 GMT, the FTSE 100 index in London was up 1.66% at 4,176.71. In Frankfurt, the DAX 30 was up 1.28% at 4,371.49 and in Paris the CAC-40 was up 1.24% at 3026.66.
On the economic front, British consumer price inflation fell by its biggest margin since April 1992 in December. According to the data from the Office for National Statistics the headline rate of consumer price inflation slowed to 3.1% from 4.1%, it's lowest since April 2008, but still above the Bank of England's 2 percent target.
Looking ahead for the day, Bank of Canada will take its interest rate decision, which will accompany by manufacturing shipment data. However, the focus will be on Barack Obama official sworn in ceremony as the 44th president of the United States.
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