Asian Markets Rejoice A Recovery

27 Jan 2009 | 16:08 Asian Markets Rejoice A Recovery
Stock markets in Asian region closed sharply higher on Tuesday, 27 January 2009, led bya nearly 5% gain in the Nikkei average as exporters benefited as the yen weakened andafter Japan said it may use public funds to help companies hurt by the financial crisis.

On Wall Street, after being up by more than 140 points earlier during the day, the DowJones Industrial Average ended higher by 38 points at 8,116, the Nasdaq closed higher by12 points at 1,489 and the S&P 500 closed higher by 4.6 points at 836. Dow had slippedin the red for a very brief period of time.

In the commodity market, crude oil gained after the U.S. currency retreated against theeuro, spurring investor demand for dollar-priced commodities.

Crude oil for March delivery rose as much as $1.42, or 3.1 percent, to $47.15 a barrel inelectronic trading on the New York Mercantile Exchange. The contract traded at $46.88 at9:40 a.m. London time.

Brent crude oil for March settlement gained as much as $1.44, or 3.1 percent, to $48.40 abarrel on London's ICE Futures Europe exchange, and was trading at $47.46 at 9:40a.m. local time.

Gold prices retreated $14.90 an ounce, or 1.64%, to $893.9 in Asian electronic trading onTuesday after the most active February Comex gold contract gained $13 an ounce, or 1.5%,to $908.8 by the close of New York trading on Monday, buoyed by strong bullion demand,safe-haven demand and a softer greenback.

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

In late Tokyo trades, the Japanese yen weakened for a second day against the dollar andthe euro as gains in stocks reduced demand for the currency as a haven from the financialcrisis. The Japanese yen was quoted at 88.43 against the US dollar, down fromMonday's quote of 88.10 yen.

The Hong Kong dollar was trading at HK$ 7.7585 against the dollar. Actually The Hong Kongdollar is pegged at HK$ 7.8 to the U.S. dollar but can trade between HK$ 7.75 and HK$7.85to the U.S. dollar.

In late Sydney trades, the Australian dollar was trading at US$0.6678 up from Monday'sclose of US$0.6596.

In late Wellington trades, the New Zealand dollar was buying US$0.5314, up compared toUS$0.5266 at close on Monday.

In late Seoul trades, the South Korean won was trading at 1,387.80 won to the U.S. dollar,down by 17 won from Monday's close of 1,370.80 won.

The Singapore dollar finished at 1.4978 against the previous close of 1.5002 while theMalaysian Ringgit closed Friday's deals at 3.6255.

In Manila, the Philippines peso strengthened against the dollar. Currently, thedollar-peso pair is worth 46.6490, compared to 47.279 hit in the early trade.

Coming back in equities, most of Asia-pacific markets remained closed for the Lunar NewYear break, including Hong Kong, South Korea, China, Singapore and Taiwan.

The Japanese stock index Nikkei finished the session sharply higher, rebounding from threemonths low on broad based bottom fishing across the board, following a overnight gain inUS markets and improved sentiments after the government plans to use taxpayers' moneyto provide capital injections to companies to non-financial sector to help them throughthe economic crisis.

Exporters soared up on a weaker yen, financials on improved sentiments, marinetransportation on tracking gains in Baltic Dry index, and metal and oil related shares onrebound in commodity prices.

The Nikkei 225 Stock Average climbed 378.93, or 4.9%, to close at 8,061.07 in Tokyo, itsfirst gain in three days and trimming the drop for this year to 9%. The broader Topixindex jumped 37.21, or 4.8%, to 805.49, the sharpest gain since 5 November 2009.

On the economic front, the Trade Ministry today said it would propose a plan for thegovernment-backed Development Bank of Japan to buy stocks in companies. Separately, Bankof Japan board members said the central bank should consider taking steps "that wouldhave stronger downward impact" on corporate debt interest rates, minutes of the Dec.18-19 meeting showed today.

In Australia, the stock market finished the session higher, after resuming tradingfollowing three days of market holidays. The gains were mainly on the back of firmer WallStreet overnight and strong gains in the shares of miners, materials and resources, andenergy on rebound in metal prices. Meanwhile, financials, healthcare, and propertiessurged on bottom fishing following recent slumps.

The benchmark S&P/ASX200 spurted 101.3 points, or 3.03%, to 3,444.0, while the broaderAll Ordinaries surged 92 points, or 2.79%, to 3,392.30.

On the economic front, the Australian Bureau of Statistics said in a report thatAustralia's final fourth-quarter Producer Price Index increased 1.3% over thepreceding quarter. The index, which measures prices of capital and consumer goods toend-buyers, gained 6.4% from year earlier.

Equities on the New Zealand stock market moved up more than 1% for the second day in a rowon Tuesday after ending almost flat yesterday. The benchmark NZX50 was up 1.11% or 30.111points to close at 2735.857. The NZX 15 rose 1.50% or 74.467 points to 5031.839.

In Philippines, the Philippines stock market ended 0.58% higher, assisted by the gains inthe index-linked counters, mainly the mining & oil index, which closed nearly 3%higher. Moreover, the rebound on the Wall Street also supported the PSEi to scale up.However, the property index added downward pressure on the composite index, thus keepingit only marginally higher. The benchmark index PSEi mounted 0.58% or 10.89 points to1,880.81.

On the economic frontage, the country's inflation is seen under pressure, as the shortageof liquefied petroleum gas (LPG) is likely to last till March, which in turn could lead tothe rise in LPG prices. Tightness in supply emerged as demand for LPG last December was30% higher than the previous month.

Moreover, composite leading economic indicator (LEI) continued its downward streak in thefirst quarter of 2009 to negative 0.075 from positive 0.210 in the fourth quarter of 2008,signifying a deceleration in the country's economic performance for the period underreview. Warning that the global economic slowdown could last until 2011, socioeconomicplanning chief Ralph G. Recto yesterday said that the government should hike spending oninfrastructure by P200 billion to P300 billion over the next two to three years.

Meanwhile, the country's total merchandise trade declined by 22.7 % to $6.995 billion inNovember 2008 from $9.049 billion in November 2007. Exports receipts in November 2008totaled to $3.513 billion, a decrease of 11.4 % from last year's $3.965 billion.Similarly, the country's merchandise imports decreased by 31.5 % to $3.482 billion from$5.084 billion in November 2007. However, the balance of trade in goods (BOT-G) inNovember 2008 recorded an increase of $31.37 million from $1.119 billion deficit in thesame period last year.

In India, Frenzied buying in index pivotals, probable short covering ahead of the expiryof January 2009 series derivatives contracts on Thursday, 29 January 2009 and positiveglobal cues triggered a solid rally on the bourses in afternoon trade. As per theprovisional figures, the BSE 30-share Sensex was up 329.73 points, or 3.80%, to 9,004.08.The S&P CNX Nifty jumped 3.46%, to 2,771.35 as per the provisional figures.

On the economic front, the Reserve Bank of India (RBI) maintaining its status quo oninterest rates, market displayed firmness throughout the day, extending early gains withpositive global cues lifting sentiment.

The RBI left its repo rate, reverse repo rate and the cash reserve ratio (CRR) unchangedin its third quarter review of the Monetary Policy for 2008-09, unveiled today, 27 January2009. However, the central bank cut its growth forecast for the fiscal year ending March2009 on a slowdown in industry and services and assuming normal agricultural production.GDP growth projection for 2008/09 was lowered to 7% from 7.5-8% earlier. The economy hasgrown at 9% or more for the past three fiscal years. The central added the inflation bythe end of March 2009 would be signficantly lower than the projected 7%.

Elsewhere, Indonesia's Jakarta composite increased by 21.05 points or 1.60% closingthe day at 1,3360.63. In Thailand, the Thai Stock exchange gained 8.06 points or 1.85% to444.79. Stock markets in Taiwan and Malaysia were closed for holiday.

In other regional market, European shares edged higher, extending the previous session'sstrong gains, as investors welcomed news that Siemens and KPN are sticking to fiscal-yearguidance despite the gloomy economic backdrop. Overall, the German DAX 30 index rose 0.6%to 4,353.72; the French CAC-40 index advanced 0.4% to 2,966.97, while the U.K. FTSE 100index dropped 0.1% to 4,203.96 as mineral extractors pressured.

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