Asian Markets Continues Celebration

28 Jan 2009 | 16:15 Asian Markets Continues Celebration
Stock markets in the Asian region closed higher for the second consecutive session on Wednesday 28 January 2009, as investors shrugged off poor corporate data and bought financials and technology stocks on expectations that credit markets will improve as governments across the world increase stimulus measures and drive down interest rates. Most of the regional indices hurry up to catch the regional rally which followed the Wall Street overnight gain.

On Wall Street, U.S. stocks closed Tuesday's trading notably above the unchanged line, although off their highs for the session. Earnings results from American Express, U.S. Steel and others that managed to post profits despite a recession-helped lift the markets. The Dow closed up 58.70 points or 0.7 percent at 8,174.73, the Nasdaq closed up 15.44 points or 1 percent at 1,504.90 and the S&P 500 closed up 9.14 points or 1.1 percent at 845.71.

In the commodity market, crude oil rose, ending two days of losses, as traders purchased contracts to close out bets that prices would decline and as an industry report showed U.S. inventories rose less than expected last week.

U.S. crude stockpiles rose by 800,000 barrels, the American Petroleum Institute said late yesterday. Crude-oil supplies rose to 338.1 million barrels last week, the API report showed. Gasoline stockpiles increased 942,000 barrels and inventories of distillate fuel, a category that includes heating oil and diesel, declined 345,000 barrels. The Energy Department report will probably show crude oil inventories rose for a 16th time in 18 weeks, increasing 2.8 million barrels in the week ended Jan. 23.

Crude oil for March delivery rose as much as 81 cents, or 2%, to $42.39 a barrel on the New York Mercantile Exchange. The contract was trading at $42.08 a barrel at 2:07 p.m. in Singapore. Yesterday, crude oil for March delivery fell $4.15 to settle at $41.58 a barrel, the biggest decline since 7 January 2009.

Brent crude oil for March settlement rose as much as 77 cents, or 1.8 percent, to $44.50 a barrel on London's ICE Futures Europe exchange. It was at $44.33 at 2:05 p.m. Singapore time. It declined $3.23, or 6.9%, to end the session at $43.73 a barrel yesterday.

Gold prices retreated $6.40 an ounce, or 0.71%, to $893.10 in Asian electronic trading on Wednesday after the most active February Comex gold contract lost $9.30 an ounce, or 1%, to $899.5 by the close of New York trading on Tuesday in line with other commodities and a firmer greenback.

In the currency market, the U.S. dollar strengthened against the Japanese yen, New Zealand dollar, Philippines peso while it weakened against the Hong Kong Dollar, Indonesian Rupaih, Chinese Yuan, Australian dollar, South Korean won and the Singapore dollar.

In late Tokyo trades, the Japanese yen weakened for a third day against the dollar and the euro. The Japanese yen was quoted at 89.29 against the US dollar, down from Tuesday's quote of 88.98 yen.

The Hong Kong dollar was trading at HK$ 7.7582 against the dollar. Actually The Hong Kong dollar is pegged at HK$ 7.8 to the U.S. dollar but can trade between HK$ 7.75 and HK$7.85 to the U.S. dollar.

In late Sydney trades, the Australian dollar was trading at US$0.6684 up from Monday's close of US$0.6613.

In late Wellington trades, the NZ dollar ended at US52.86c from US52.84c yesterday. The New Zealand dollar had a mixed session, spent mostly below the US53c figure ahead of the Reserve Bank's official cash rate (OCR) decision tomorrow.

In late Seoul trades, the South Korean won was trading at 1,376.50 won to the U.S. dollar, up by 10.85 won from Tuesday's close of 1,387.35 won.

The Singapore dollar finished at 1.4986 against the previous close of 1.5049 while the Malaysian Ringgit closed Wednesday's deals at 3.5852.

In Manila, the Philippines peso strengthened against the dollar. Currently, the dollar-peso pair is worth 46.9550, compared to 46.8050 hit in the early trade.

Coming back in equities, the trade in the region was fairly subdued, with markets in China, Hong Kong and Taiwan still shut for the extended Chinese New Year break.

In Japan, the stock indices finished the session higher for the second consecutive session clawed back morning losses with gains in banks on hopes for U.S. action to support its banking sector and after a U.S. stimulus plan was expanded. However, market gains remain capped on worries about upcoming Japanese corporate earning after major companies such as Canon, Nomura, Panasonic Corp, and Fuji Fire & Marine Insurance Company issued an earning warning amid the global recession. The Nikkei 225 Stock Average index gained 45.22 points, or 0.6%, to 8,106.29, while the broader Topix shed 1.16 points, or 0.1%, to 804.

The Australian markets also extended their gains for the second consecutive session following overnight gains on Wall Street and strong gains in the shares banks and financials, healthcare, telecom, and retailers. Meanwhile, miners and materials and resources jumped on rebound in metal prices. The benchmark S&P/ASX200 spurted 51.50 points, or 1.5%, to 3,495.50, while the broader All Ordinaries surged 42.80 points, or 1.26%, to 3,435.10.

On the economic front, Australia's consumer prices dipped into deflation for the first time in two years in the recently ended quarter, a development that's likely to be scrutinized carefully at the Reserve Bank of Australia's monetary policy board meeting next week.

According to the data released by Australian Bureau of Statistics the consumer prices fell 0.3% in the fourth quarter, reversing a 1.2% rise in the third, as prices for gasoline, automobiles, prescription drugs and loans declined. On an annual basis, prices rose 3.7% from the year-earlier period, moderating from a 5% annual rise in the July-September quarter. The decline was the sharpest in any quarter since July-September 1997.

Equities on the New Zealand benchmark index spiked up for the third time in a row on following the Wall Street. After a quite start, the benchmark NZX50 moved forward 0.44% or 12.044 points to close at 2747.901. The NZX 15 rose 0.55% or 27.522 points to 5059.361.

On the economic front, investors remain apprehensive regarding the outcome of the first review of official interest rates for 2009.Currently, the key Official Cash Rate stands on 5% - down from 8.25% in July when the RBNZ had begun slashing it in an attempt to help the economy rebound from recession that has engulfed the globe since the start of 2008. Moreover, the Reserve Bank plans to hold a press conference tomorrow to announce its latest interest rate decision and allow the governor to respond to questions arising at a time when uncertainty hovers around.

In South Korea, stock markets continued their celebration mood catching up with the regional advance, as market closed sharply higher on the first day of trading following the Lunar New Year holidays, lifted by steep gains in technology stocks. Additionally, gains on Wall Street overnight helped boost investor sentiment. The Korea Composite Stock Price Index sprang 64.58 points or 5.91% closing the day at 1,157.98 - the highest close in six weeks.

On the economic front, South Korean consumer confidence improved in January from a ten year low recorded in December. According to the survey from Bank of Korea the index rose to 84 in January on economic stimulus package and easing interest rate. In December, the reading was 81 suggesting that pessimists outnumber optimists.

In Singapore, the stock market finished the session sharply higher in thin trade, after resuming trading following four days of market holidays, on the back of firmer Wall Street overnight and strong gains in the shares of banks and financials, properties, manufacturing, and transport and communication. The benchmark Straits Times Index spurted 80.85 points, or 4.8%, to 1,766.08.

Bucking the regional trend the stock market in Philippines gave away yesterday's gain, ending lower, as risk aversion prevailed among investors in tandem with the weak economic data released yesterday, which points to more difficulties for the Philippines economy. The benchmark index PSEi dived 0.59% or 11.25 points to 1,869.56, while the all share index tumbled 0.31% or 3.87 points to 1,215.38.

On the economic front, the National Economic and Development Authority (NEDA) projection of GDP showed a marked deceleration. The NEDA projected the GDP to grow 3.6% - 4.4% in the fourth quarter of last year as all sectors have weakened compared to 2007. Meanwhile, growth for 2008 is expected to be within 4.2 to 4.5%

Moreover, imports fell steeply by 31.5% and weakening demand also showed up in factory output, which fell by 6.6% in November after rising by 2.4% a month earlier. Also yesterday, the government said the composite leading economic indicator (LEI) for the first quarter of 2009 had slipped to -0.075, extending a fall that began in the third quarter of 2008.

In India, key benchmark indices advanced to day's apex in mid-afternoon trade tracking strong global cues. Index heavyweights Reliance Industries, ONGC and ICICI Bank were in forefront of the rally. Short covering of open positions ahead of January 2009 derivative contracts expiry tomorrow, 29 January 2009 also aided the upmove. As per the provisional figures, the BSE 30-share Sensex was up 253.39 points, or 2.81%, to 9,257.47. The S&P CNX Nifty jumped 2.82%, to 2,849.50 as per the provisional figures.

Meanwhile, Lok Sabha elections will be held between 8 April and 15 May 2009, the Election Commissioner S Y Quraishi informed today, 28 January 2009. General election in India is the largest electoral exercise in the world involving 671 million voters.

Elsewhere, Malaysia's Kula Lumpur Composite index was up by 6.94 points or 0.80% closing the day at 879.63 while Indonesia's Jakarta composite decreased by 15.08 points or 1.14% closing the day at 1,321.45. In Thailand, the Thai Stock exchange gained 3.56 points or 0.80% to 448.35. Stock markets in Taiwan were closed for holiday.

In other regional market, European stocks started strong out of the gate, with advancers far outnumbering decliners even as corporate results from the likes of SAP and Novartis were decidedly mixed. Overall, the U.K. FTSE 100 rose 1.4% to 4,254.10, the German DAX 30 added 2.5% to 4,430.12 and the French CAC 40 climbed 2.1% to 3,016.61.

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