Apr 15, 2008

International Markets - Asian Markets dive further

09 Apr 2008 | 15:05

Asian Markets dive further


Asian markets slide deeper into the red with financials such as Mitsubishi UFJ Financial Group in Tokyo, National Australia Bank in Sydney and Ping An Insurance (Group) Co. of China in Hong Kong reacting to worries about global credit markets and a decline on Wall Street.

Japan's Nikkei 225 Average dropped 1.1% to 13,111.89 in late afternoon trading, while the broader Topix index fell 1.5% to 1,262.90. Both benchmarks gave up early gains as the Bank of Japan negatively revised its economic outlook. In its monetary policy meeting the Bank of Japan (BoJ) announced to keep its rate unchanged. The BoJ dropped its view published last month that a moderate expansion remained in place. It also negatively revised its economic outlook, saying the economy was slowing. Japan's economic growth is slowing mainly due to the effects of high energy and materials prices.

The BoJ cautioned corporate profits were leveling off and sentiment among businesses had grown more cautious. It added housing investment had started to recover, but that the pace of spending in the sector was growing only slowly.

China's Shanghai Composite plunged by 5.5% to 3,413.91, after rising for four days, amid concerns about slowing earnings growth.

Hong Kong's Hang Seng Index lost 1.4% to 23,984.57, while the Hang Seng China Enterprises Index shed 2.5% to 12,863.80.

Australia's S&P/ASX 200 declined 0.9% to 5,520.20, after climbing as high as 5,610.10 earlier in the day.

India's Sensitive Index, or Sensex, dropped in early trading, but bounced off 15,464.72. It was recently up 0.5% at 15,660.03.

Elsewhere, New Zealand's NZX 50 index lost 0.8% to 3,575.45; Singapore's Straits Times Index fell 1.1% to 3,0.95.58 and Taiwan's weighted index slipped 0.1% to 8,667.93, also hurt by late selling.

South Korean stock markets were closed for the country's parliamentary elections.

In Asian currency trading, the U.S. dollar bought 102.57 yen. The greenback was quoted at 101.96 yen in Asia and 102.36 yen in New York late Tuesday.

Crude oil for May delivery climbed as much as 30 cents to $108.80 in electronic trading, after dropping 59 cents to $108.50 a barrel on the New York Mercantile Exchange.

In European Session the national indices opened in negative territory ahead of important economic data releases. In its opening trade the U.K. FTSE 100 index fell 0.6% to 5,954.60, the German DAX 30 index declined 0.9% to 6,714.39 and the French CAC-40 index dropped 0.8% to 5,874.10.

On the data release side we had German trade balance that showed a slight decline in February. Februarys trade balance has posted a EUR 16.9 billion surplus in February, down from the EUR 17.1 billion surplus posted in the previous month. On the year German exports increased 9.0%, while imports recorded a 7.0% increase.

The current account of balance of payments has shown a EUR 15.4 billion surplus in February when the balance of services remained unchanged, the net factor income posted a 4.2 billion surplus, current transfers posted a 5.0 billion deficit, and supplementary trade items registered a 0.6 billion deficit.

Meanwhile Euro zone confirmed the sign of slowdown in fourth quarter of 2007 as the gross domestic product (GDP) for the region slowed to 0.4% in the Q4 of 2007 matching the initial estimates from Euro stat. Compared to the Q4 of 2006, fourth-quarter GDP grew 2.2% year-on-year. For all of 2007, GDP growth slowed to 2.6% in 2007 from 2.8% in 2006.

In United Kingdom the weaker pound helped the manufacturing sector to weather the credit crisis relatively well as official figures showed output rising for the second month running in February.

The office for National Statistics said manufacturing output rose 0.4 %in February from January. The previous month's growth was revised up to 0.5 %from 0.4 percent. That was the first time output increased for two months running since the three consecutive increases between March and May last year.

In annual terms manufacturing output rose 1.9 %in February, up from January's 0.6 %year-on-year gain posting the highest since December 2006's 2.0 percent.

The day ahead will feature events like BRC shop price index followed by MBA mortgage application data. In the evening we will turn our focus to the speech from Mr. Bernanke Federal Reserve Chief that will follow by the data on wholesale inventories and EIA Crude oil stocks.