Mar 1, 2009

Asian Market Starts February With A Little Optimism

02 Feb 2009 | 16:19 Asian Market Starts February With A Little Optimism
Stock market in Asian region opened the month of February in despair as most ofregional equity market gave their gaining sprit following the triple digit loss on WallStreet on Friday. The negative sentiment was also flourished on the back of negativeeconomic woes, which strengthened the fact that the global economy is weakening at afaster pace.

On Wall Street, the stocks extended losses on Friday, led by financial stocks, on concernsthat the bad bank plan, which is expected to be a government program to absorb toxic debt,may not come to fruition. Also, grim GDP data for the fourth quarter weighed on investorsentiment. The Dow Jones Industrial Average ended lower by 148 points at 8,000, the Nasdaqclosed lower by 31 points at 1,476 and the S&P 500 closed lower by 19 points at 826.

Among major economic reports for the day, there were quite a few of them. But the mostimportant one was when the Commerce Department reported that the U.S. economy contractedat a 3.8% annualized rate in the fourth quarter, a decline that would have been worseexcept that the government counts an unwanted buildup of goods on store shelves as growth.Adjusted, gross domestic product contracted at a 5.1% pace in the final three months of2008, the weakest in 28 years. But still it was less bad than feared.

In the commodity market, crude oil was little changed in New York amid concerns workersmay strike at U.S. refineries, limiting fuel supplies, and OPEC may enact deeper outputcuts.

Crude oil for March delivery dropped $1.35 or 3.24%, to $40.33 a barrel in after-hourselectronic trading on the New York Mercantile Exchange at 10:10 a.m. London time. Thecontract gained 0.6 percent to $41.68 a barrel on Jan. 30 as the threat of refinerystrikes in the U.S. helped push gasoline futures to an 11-week high and the CommerceDepartment reported a smaller-than-expected contraction in the U.S. economy in the fourthquarter.

Brent crude oil for March settlement rose $ 1.23, or 2.68%, to $44.65 a barrel on London'sICE Futures Europe exchange. It gained 1.1% to $45.88 a barrel on Jan. 30.

Gold prices retreated $13.20 an ounce, or 1.42%, to $914.10 in Asian electronic trading onMonday after the most active February Comex gold contract gained $21.90 an ounce, or 2.3%,to $927.30 by the close of New York trading on Friday in response to strong investordemand for bullion.

In the currency market, the U.S. dollar strengthened against the Australian dollar, NewZealand dollar, South Korean won, Philippines peso, Indonesian Rupaih Singapore dollar,while it weakened against the, Hong Kong Dollar, Chinese Yuan, New Taiwan Dollar andIndian Rupee.

In late Tokyo trades, the Japanese yen strengthened against the dollar. The Japanese yenwas quoted at 88.9900 against the US dollar, down from Friday's quote of 89.9100 yen.

The Hong Kong dollar was trading at HK$ 7.7542 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$0.6270 down from Friday'sclose of US$0.6355.

In late Wellington trades, the NZ dollar ended at US50.89c from US51.95c Friday. The NewZealand dollar edged closer to a six-year low against the greenback today, as dataconfirmed a slowing job market.

In late Seoul trades, the South Korean won was trading at 1,390.40 won to the U.S. dollarin early trades, down 10 won from Friday's close of 1,380.40 won.

Coming back in Asian equities the stock markets in Japan, Hong Kong, South Korea,Australia, New Zealand, Thailand, Singapore, Indonesia, India opened the month on a lowernote while China, Taiwan, Malaysia and Philippines closed the day on a higher note.

In Japan, the stock market finished the session lower, extending losses for secondconsecutive day, as investors continued to fret about gloomy earnings results and downwardrevisions of full-year earnings projections by major Japanese companies, and the grim U.S.economic outlook. Meanwhile, a firmer yen and deepening recession worries intensified thefall. The Nikkei 225 Stock Average index tumbled 120.07 points, or 1.5%, to 7,873.98,while the broader Topix dropped 16.18 points, or 2.04%, to 777.85.

In Mainland China, the stock index finished the session higher, after resuming tradingfollowing five days of market break to celebrate the Lunar New Year, with the gains inagriculture firms after Beijing vowed to prevent a slump in grain production and cut taxeson agriculture-related loans. The benchmark Shanghai Composite Index rose 21.02 points, or1.1%, to 2,011.68.

On the economic front, the commerce ministry reported on the weekend that the retail saleswere up 13.8% during the seven-day holiday period that began 25 January 2009 compared withthe same period of 2008. The CLSA China Purchasing Managers' Index rose to aseasonally adjusted 42.2 in January from 41.2 a month earlier.

In Hong Kong, the stock markets snapped two days of winning streak to finish the sessionlower, on broad based slumps across the board on gloomy growth prospects and domesticrecession worries following Wall Street slumps and after the Chinese prime minister said8% economic growth is hard to achieve. The Hang Seng Index tumbled 416.72 points, or3.14%, to 12,861.49, while the Hang Seng China Enterprise Index was down 219.99 points, or3.08% to 6,911.99.

On the economic front, Hong Kong's value of total retail sales provisionallyestimated at $25.3 billion, increased by 0.8% in December 2008 compared with a yearearlier. After netting out the effect of price changes over the same period, the volume oftotal retail sales decreased by 0.7% in December 2008 over a year earlier.

In Australia, the stock market finished the session lower, snapped four days of winningstreak, weighed down by broad based slumps across the board on gloomy global growthprospects and domestic recession worries, following the Wall Street plunge on Friday onmore evidence the US economy is contracting. The benchmark S&P/ASX200 retreated 43.30points, or 1.22%, to 3,497.4, while the broader All Ordinaries dropped 34.60 points, or0.99%, to 3,443.50.

On the economic front, the Australian Bureau of Statistics said in a report that theaverage existing house prices in Australia's eight capital cities decreased by 0.8%for the three months to December 2008. For the full year to the December 2008 quarter, thepreliminary weighted average established price index for the eight capital cities was down3.3. The Australian Industry Group and Price Waterhouse Coopers Performance ofManufacturing Index (PMI) increased by 3.7% in January to a reading of 36.6. The monthlyinflation gauge from TD Securities and the Melbourne Institute grew by 0.8% in January,bringing the full-year rate to 2.7%.

In New Zealand, the equity market commenced the first trading day of February in thenegative region ending its five-day winning streak in the first trading session ofFebruary. The benchmark NZX50 dipped after registering a five-day winning streak. It fell0.10% or 2.648 points to close at 2771.496. The NZX 15 however inched up 0.10% or 4.888points to 5126.803.

On the economic front, New Zealand employees worked fewer hours last year registering thefirst such drop in nine years, according to Statistics New Zealand. The total paid hoursin the country, when seasonally adjusted, decreased by 1.4 percent in the year to December2008. It was mainly due to decreases in the manufacturing, construction, and wholesaletrade industries. In the December 2008 quarter, salary and wage rates (including overtime)increased 0.7 percent, down from a record 1.1 percent increase in the September 2008quarter.

Moreover, the labour cost index (LCI), also released today, showed that salary and wagerates including overtime were 3.3 percent higher in the December 2008 quarter than in theDecember 2007 quarter. This increase is down from a 3.6 percent annual rise for theSeptember 2008 quarter recording the largest dip since the series began in the December1992 quarter.

Adding to the already deteriorating situation on the economic front, the Treasury saidthat the New Zealand's economy will stay in recession at least until the end of March thisyear and a worsening global outlook is adding to the risk of a steeper slowdown.

In South Korea, stock markets started the month of February on pessimistic note as majorregional indices showed some correction. The market also followed the regional sentimentsthat traced the Wall Street losses registered over the weekend. The Korea Composite StockPrice Index fell 15.16 points or 1.30% closing the day at 1,146.95.

On the economic front, South Korea's Ministry of Knowledge Economy said in a preliminaryreport that the country's exports plummeted by a record 32.8% on year in January to $21.69billion. Exports were down 17.4% on year in December.

Meanwhile, imports fell 32.1% on year in January to $24.66 billion, slightly better thanexpectations for a 33.5% fall on year after a 21.5% annual decline in the previous month.Trade deficit for the month was $2.97 billion and follows a revised $540 million tradesurplus in December.

In a separate release, the inflation level in South Korea showed some contraction as theconsumer price inflation stood at 3.7% year-on-year in January, down from 4.1% recorded inDecember. According to the data released by the National Statistical Office reported on amonthly basis, the consumer price index edged up 0.1% in January, after remaining flat inthe prior month.

In Taiwan, after enjoying the ten days of Lunar New Year holiday, the stock markets openedthe month of February on a positive note. All major sectoral indices posted a good gainresulting in to positive start for the month of February. The main Taiex share indexgained 12.01 points or 0.28% at 4,259.98.

On the economic front, the consumer confidence index of Taiwan plunged to a new recordlow, a day after the government announced it would create 150,000 jobs. According to asurvey released by National Central University the overall index for January fell to48.95, or a drop of 0.8 points from the previous monthly survey. The figures between 0 and100 express pessimism, while the range from 100 to 200 is a sign of optimism.

The survey was held before the Cabinet announced Sunday evening it would create 150,000jobs before the end of the year in order to keep the overall jobless rate for 2009 below4.5%. The unemployment rate crossed 5% in January, and is expected to reach 6%, as manybusinesses are expected to announce layoffs now that the Lunar New Year holiday is over.

In Philippines, the stock market ended mixed, with the benchmark index closing onlymarginally higher, owing to the weak earning reports released by the local companies. Thebenchmark index PSEi climbed 0.46% or 8.48 points to 1,833.57, while the all share indexrose 0.19% or 2.30 points to 1,197.14.

In Singapore, the stock market finished the session lower endured losses for secondconsecutive day, on fret over on gloomy global growth prospects and domestic recessionworries following Wall Street slumps on Friday. The benchmark Straits Times Index tumbled41.18 points, or 2.36%, to 1,705.29.

On the economic front, Singapore's Economic Development Board said on Friday that thebusiness outlook in the manufacturing sector is expected to be weak in the first sixmonths of 2009 amid decline in global economic conditions. A net of 57% of manufacturersexpect a less favorable business outlook in the six months ending June compared to theprevious six months. Singapore has launched S$100 million plan to move customer service upanother notch.

In India, sustained selling pressure on weak global cues following renewed concerns aboutthe deteriorating state of the US economy and latest data showing the Dow may slide 64points at the opening bell took its toll on the key benchmark indices, which tumbledtoday's trade. As per the provisional figures, the BSE 30-share Sensex was down 375.25points, or 3.98%, to 9,048.99. The S&P CNX Nifty fell 113.85 points, or 3.96%, to2,760.95.

Elsewhere, Malaysia's Kula Lumpur Composite index was up 0.15% or 1.29points to 884.45,while Indonesia's Jakarta composite decreased by 22.02 points or 1.65% to 1310.64. InThailand, the Thai Stock exchange fell 9.84 points or 2.25% to 427.85.

In the other regional market, European shares declined today morning, with banks by farthe worst performers in the first trading day of the new month. On a national level, theU.K. FTSE 100 index fell 1.4% to 4,090.16, the German DAX 30 index declined 2.1% to4,248.63 and the French CAC-40 index lost 2.5% to 2,900.79.