Sep 14, 2008

Asian Markets Remain Mixed As Oil Plunge Below $107 Mark

02 Sep 2008 | 17:01




Asian Markets Remain Mixed As Oil Plunge Below $107 Mark


The stock markets across the Asian region closed mixed after a sharp
decline in the previous session. The Japanese market finished at a
five-month low following the Japanese prime minister's sudden
resignation announcement. Further, a state of emergency declared by
Thailand also weighed on regional stocks. Wall Street remained closed
on yesterday on account of the Labor Day holiday.

Oil
plunged in the Asian session to slightly below $107 a barrel by 5:38
a.m. ET, pushing the dollar to a seven-month high against the euro and
prompting a sell-off in the commodities sector. Crude oil prices held
near a four-month low in the Asian session after Hurricane Gustav
weakened before striking the Louisiana coast, easing concerns about any
major damage to rigs and refineries. In late Asian session, crude oil
plunged as much as $9.31 to trade at $106.15 a barrel as fears about
Hurricane Gustav causing any major damage to rigs and refineries in the
Gulf of Mexico region eased.

On the currency front, the U.S.
dollar traded in the mid 108-yen levels in late local deals, up from
the upper 107-yen levels late Monday in Tokyo. In London overnight, the
dollar was initially sold for the yen on falling Asian stock prices and
rising oil prices, but the dollar later rose partly due to the news
that Japanese Prime Minister Yasuo Fukuda was resigning.

The
Australian dollar closed two U.S. cents lower, after falling to its
lowest level in almost a year, as the price of oil and gold dropped
sharply during the Asian session. The local unit received a small
bounce from an open ended statement from the Reserve Bank of Australia
after its decision to cut interest rates for the first time in almost
seven years, but that was wiped away in the last hour of trade. The
Aussie finished the session at US$0.8398-0.8402, down from Monday's
close of US$0.8537-0.8742.

The New Zealand dollar fell to
one-week lows against the greenback, as traders steered clear of
high-risk currencies. The kiwi closed the session at US$0.6926-0.6931,
down from US$0.6958-0.6960.

The South Korean won fell to new
46-month lows, reversing early gains, on dollar demand from foreign
stock investors and importers. The local currency closed at 1,134.0 a
dollar, down from yesterday's close of 1,116.0. The won has lost almost
18% against the dollar so far this year.

Coming back in Asian
equities, the Japanese market closed sharply lower, extending Monday's
steep losses. After seeing some strength in the morning session
following a flat opening, the market gave up gains, sending the
benchmark Nikkei index to a five-month low. Falls in key Asian markets
and political uncertainty due to Prime Minister Yasuo Fukuda's abrupt
resignation announcement yesterday prompted investors to sell stock in
late trade.

The key Nikkei index lost 1.75% to finish the
session at 12,609.47, its lowest close since 31 March 2008. The broader
Topix index closed down 1.48% at 1,212.37.

On the economic front,
the Bank of Japan said that Japan's monetary base declined 0.2% on year
in August to 87.94 trillion yen outstanding after a 0.7% annual decline
in July. On a seasonally adjusted basis, the monetary base was up 5.7%
on year at 88.31 trillion yen outstanding.

The Chinese market
closed lower, extending yesterday's 3% slump, on worries about a
slowdown in economic growth. The benchmark Shanghai Composite Index
closed down 0.87% at 2,304.89, near 20-month intra-day low of 2,284.58.
In Shenzhen, the All Share index plunged by 0.32% to 635.49.

On
the economic front the data reported that China's purchasing managers'
index came in at 49.2 in August, down from 53.3 in July, indicating a
contraction in the manufacturing sector for the first time since
November 2005.

The Hang Seng China Enterprises tracked Shanghai
stocks gained 0.12% to 11,453.15 while the benchmark Hang Seng index
closed down 0.65% at 21,042.36.

The Australian stock market
closed slightly lower after the Australian central bank cut its key
interest rate by 25 basis points. The market posted strong gains after
a weak start, climbing as much as 1.2%, but gave up ground as
rate-sensitive stocks trimmed their gains in the afternoon session. The
big miners fell on lower metal prices, offsetting the gains in the
banking sector.

The benchmark S&P/ASX 200 index closed down
2.3 points at 5,116.0, extending losses for the second consecutive
session. The broader All Ordinaries index lost 5.0 points or to finish
5,195.0.

The Reserve Bank of Australia reduced its key interest
rate to 7% from the all-time high 7.25%, marking the first rate cut in
almost seven years and 12 straight rate increases.

Meanwhile, the
Australian Bureau of Statistics said that the number of construction
permits issued for new dwellings in Australia decreased by a seasonally
adjusted 2.3% in July when compared to June. On year-over-year basis,
the number of building consents fell 3.7%.

The New Zealand Market
closed higher today, extending gains for the fourth straight trading
session. The market traded higher, despite any lead from Wall Street,
but came off day's highs in the afternoon session. The financial
markets in the U.S. remained closed on yesterday due to the Labor Day
holiday. The benchmark NZX 50 index closed up 0.28% at 3,367.25 and the
broader NZX All Capital Index rose 0.18% to finish at 3,404.47. On the
economic front, investors had little data to digest on today.

The
South Korean market fell to an eighteen-month low amid concerns that
the won's sharp decline might drag down the economy. The benchmark
Korea Composite Stock Price Index or Kospi closed down 0.52% at
1,407.14, following yesterday's more than 4% plunge. The index has
fallen by around one-third since hitting its historical high in
November 2007 and is down 26% from the year's high of 1,901 hit in
mid-May.

On the economic front, South Korea's tax revenues jumped
14.9% during the first half of 2008 to 91.2 trillion won from 79.4
trillion won a year earlier on increased corporate tax incomes,
according to the report submitted by the National Tax Service to the
National Assembly.

In India, a steep slide in global crude oil
price pushed key benchmark indices sharply higher today. The 30-share
BSE Sensex crossed the psychological 15,000 mark for the first time in
three weeks. Sensex jumped 552.94 points as per provisional closing.
Realty and banking shares were star performers, while healthcare stocks
lagged behind in today?s rally.

As per provisional closing, the
BSE 30-share Sensex was up 552.94 points or 3.81% to 15,051.45. At
day's high of 15,106.15, the Sensex rose 607.64 points in mid-afternoon
trade. The index rose 44.70 points at the day?s low of 14,543.21 hit in
mid-morning trade. The S&P CNX Nifty was up 153 points or 3.52% to
4501.65.

Elsewhere, Taiwan's Taiex slumped by 1.66% at 6,699.82
while Singapore's Strait Times gained by 1.66% at 2,758.94. Indonesia's
Jakarta Composite index closed down 0.26% at 2,159.05.

In the
other part of the world, a big drop in crude-oil futures helped
airlines, autos and many other stocks to rise strongly in Europe,
offsetting weakness for commodity-sector firms.

Of national
indexes, the German DAX 30 index climbed 1.5% to 6,516.12 and the
French CAC-40 index rose 1.2% to 4,524.79. The commodity-heavy U.K.
FTSE 100 index rose 0.4% to 5,625.30. At 10.52 GMT all this national
indices maintain their gains. U.K. FTSE 100 index increased further to
0.12% to 5,609.60. The German DAX 30 index was up by 1.35% to 6,508.59,
while the French CAC-40 index was up by 1.23% to 4,527.10.



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