Apr 15, 2008

International Markets - Asia to end on mix note as Shanghai rebounds

10 Apr 2008 | 15:52

Asia to end on mix note as Shanghai rebounds

Asian markets ended on a mixed note with Japanese stocks dropping in the wake of a fall in February core machinery orders, while the shanghai composite rebounded from the earlier losses on the positive data release which helped Yuan appreciation to cross 7 Yuan a dollar for the first time since the end of the peg.

Shanghai-listed stocks, which sank more than 5% in the previous session, swung between positive and negative territories a few times during the volatile session and influenced the movement of China-related shares in Hong Kong. The Shanghai Composite ended the session 1.7% higher at 3,471.74 on the back of positive data release showing upswing in Chinas GDP and FDI investment.

The U.S. dollar fell below the 7-yuan level for the first time since China removed the Yuans fixed peg to the dollar. The dollar recently bought 6.99 Yuan, bringing the Yuans advance to 18.4 % since the end of the peg.

China's National Bureau of Statistics revised 2007 gross domestic product growth to 11.9 pct from 11.4 pct. GDP totaled 24.953 trillion Yuan in 2007, based on current prices. This was 291.1 billion Yuan more than the initial estimate, the bureau said. The Foreign direct investment showed an upswing in first quarter (FDI) inflows into China in the first three months of the year totaled $ 27.414 billion, up 61.26% from a year earlier.

China's consumer confidence index dropped in the first quarter, affected by inflationary pressure. The index fell 1.7 % from the previous quarter to 94.8. Consumer confidence hit an 18-month low of 94.3 in February following reports that the consumer price index had surged to a 12-year high of 8.7 %, with food prices expanding by 23.3 %.

Shares of Industrial & Commercial Bank of China, however, advanced in Hong Kong after the lender forecast a strong profit growth and helped the benchmark Hang Seng Index come off its early lows. The Hang Seng was closed 0.8% up at 24,187.10, after dropping as low as 23,905.58 earlier in the day. The Hang Seng China Enterprises index gained 1% to 12,998.21.

In Tokyo, the Nikkei 225 Average dropped 1.3% to 12,945.30. The broader Topix index shed 1.2% to 1,248.07. Japan's core private sector machinery orders fell a seasonally adjusted 12.7 % to 1.06 trillion yen in February from January as orders for steel, pulp and paper, and petroleum products declined. This was the first fall in two months, and followed a 19.6 percent rise in January.

Meanwhile, Japan's current account surplus rose 2.9 % to 2.468 trillion yen in February from a year earlier, as higher portfolio income offset the drop in the trade surplus. In another release Japan's money supply shown by M2 plus certificates of deposit, grew 2.2% on year in March, slightly slower than February's 2.3% on-year rise.

Australia's S&P/ASX 200 index fell 1.3% to 5,446.40 on the back of increase in the unemployment to a seasonally adjusted 4.1% in March 4% in February 2008. New Zealand's NZX 50 index lost 1% to 3,540.01, and Taiwans weighted index rose 1.9% to 8,829.40.

Singapore's Straits Times index fell 0.8% to 3,064.60. However the data release today showed economy expanded at an annual pace of 7.2 % in the first quarter, led by double-digit growth in manufacturing.

South Korea's Kospi rebounded from early declines and was recently 0.6% higher at 1,764.64 as the Bank of Korea left its key interest rate unchanged at 5.0 % for the eighth straight month as it continues to grapple with rising inflationary pressures.

May crude-oil futures rose as much as two cents to $110.89 a barrel in electronic trading. On the New York Mercantile Exchange overnight, the contract hit an all-time high of $112.21 a barrel before ending $2.37 up at a record closing high of $110.87 a barrel.

In currency trading, the U.S. dollar bought 101.06 yen. The dollar bought 102.30 yen in Asia and 102.34 yen in New York late Wednesday.

Meanwhile, shares fell in Europe as oil prices moved back toward record highs and investors continued to worry about lingering effects of the credit market crisis on economic growth ahead of a pair of interest rate decisions.

Of national indexes, the U.K. FTSE 100 index fell 0.7% to 5,938.40 and the French CAC-40 index declined 1.5% to 4,800.53. The German DAX 30 index fell 1.4% to 6,627.17.

The euro rose to a record against the pound on speculation the European Central Bank will leave its benchmark interest rate at a six-year high while the Bank of England reduces borrowing costs. The euro rose to 80.27 British pence, the highest level since the Euro zone inception, before trading at 80.01 pence as of 8:50 a.m. in London. It was also within a cent of an all-time high against the dollar, at $1.5857 from $1.5831.