15 Jul 2008 | 15:36
Asian Markets Register Broad Based Decline
Asian
markets tumbled across the board, extending their poor run and pulling
down regional indexes, on persistent worries about the health of the
U.S. financial sector. Taiwanese and Japanese financials were hit
especially hard on reports about their exposure to troubled U.S.
mortgage giants Freddie Mac and Fannie Mae.
Overnight, the Dow
Jones Industrial Average fell 0.4% to 11,055.19, the Nasdaq Composite
gave up 1.2% to 2,212.87 and the S&P 500 index dropped 0.9% to
1,228.30 as uncertainty reigned in the wake of the failure of IndyMac
Bancorp and the government rescue of mortgage-finance giants Fannie Mae
and Freddie Mac.
On the currency front, the U.S. dollar was
mixed against major Asian currencies. The greenback opened higher
against the South Korean won at 1,005.0 a dollar, but was trading
weaker at lower 106-yen levels in early Tokyo deals. The Australian
dollar opened stronger at US$0.9716-0.9719 after hitting a fresh
25-year high on Monday. In early trades, the kiwi was buying US$0.7636
compared to US$0.7612 at close on Monday.
Coming back in Asian
equities the benchmark Nikkei 225 index closed down 1.96% at 12,754.56.
The index slipped below the 13,000 mark for the first time since April
15. The broader Topix index fell 2.2% to finish at 1,253.12.
On
the economic front, Bank of Japan's policy board, meanwhile,
unanimously decided to keep the key policy rate unchanged at 0.5%. The
central bank said in its monthly report on economic and financial
developments for June that the domestic economy was slowing due to
rising energy and material costs and said that although the economy
will likely continue to slow for a while, it will begin to grow
gradually after that.
China's Shanghai Composite dropped 3.4% to
2,779.45. In Hong Kong, the Hang Seng Index lost 3.8% to 21,174.77,
while the Hang Seng China Enterprises Index slumped 4.7% to 11,687.32.
South
Korean market sank with the key Kospi falling to 15-month lows. The
market started off weak, tracking a weak lead for the U.S., and
extended losses for a second straight session on weakness in the Asian
region and higher crude oil prices. Reports that South Korean financial
companies had a preliminary $550 million in total exposure to the
struggling Fannie Mae and Freddie Mac also added to the gloom.
The
benchmark Kospi tumbled 3.2% to end at 1,509.33. The index closed its
lowest close since April 2007 and recorded its biggest single-day
percentage drop since February.
Meanwhile, South Korea's revised
trade deficit widened to US$430 million from an earlier estimate of
$280 million in June due mainly to increased oil imports, government
report showed Tuesday. Exports were revised downward to $37.32 billion
in June from the previous $37.44 billion, while imports reached $37.75
billion, up from an earlier estimate of $37.72 billion.
Elsewhere,
Singapore's Straits Times Index fell 2.5% to 2,830.75 while Taiwan's
weighted index was down 4.5% at 6,834.24. Malaysia's KLCI was down 1.4%
to finish at 1,127.60.
The Australian stock market fell
extending yesterday's 1.2% losses after Wall Street closed lower for a
second day on lingering concerns about the U.S. credit market crisis.
Energy stocks and gold miners mostly gained as oil stayed near a record
and the precious metal surged overnight.
The benchmark
S&P/ASX200 index closed down 2.1% at 4,815.7, hitting its lowest
closing level in two and a half years. The index has dropped 24% since
the beginning of the year, putting it on course to post its first
annual loss since 2002. The broader All Ordinaries lost 97.8 points or
2.0% to finish at 4,910.1.
On the economic front, minutes of the
Reserve Bank of Australia's July meeting showed that the central bank
is growing more confident that decade-high interest rates will restrain
future inflation, reinforcing views monetary policy is on hold.
In
addition to this the Australian Bureau of Statistics reported that the
value of construction work done in Australia fell sequentially in the
first quarter, reflecting a decline in all types of construction
activities. The total value of construction activity declined a
seasonally adjusted 1% to A$16.48 billion in the first quarter compared
to the previous quarter.
The New Zealand stock market closed
sharply lower, extending Monday's 1.35% decline. The market opened on a
firm note, but slipped into negative territory following the release of
worse-than-expected inflation data. The benchmark NZX 50 Index closed
down 1.3% at 3,040.5, hitting a new three-year low.
According
to the data released by Statistics New Zealand showed that New
Zealand's consumer price index or CPI jumped 1.6% in the second
quarter, recording the largest quarterly rise in eighteen years.
Analysts expected CPI to rise 1.4%. For the year, inflation hit 4.0%
against market expectation for a 3.8% increase.
Statistics New
Zealand also said that food prices increased 1.3% in June. Food prices
rose 2.2% in the June quarter. On an annual basis, food prices rose
8.2%, the highest in 18 years.
The Indian market is currently
extending losses after opening on a weak note. Amid negative global
cues over concerns about the fallout from the credit crisis and
continued selling from foreign funds, traders are hesitating to make
fresh buying. After opening down 263 points, the BSE Sensex is
currently trading at 12,673, down 657 points or 4.9% over the previous
day's close. Meanwhile, the S&P CNX Nifty index is down 180 points
or 4.5%.
Turning toward European markets, which traded sharply
lower as the series of negative economic events hit the markets hard.
In the opening trade, the German DAX 30 index fell 1.5% to 6,105.13,
the French CAC-40 index dropped 1.4% to 4,083.22 and the U.K. FTSE 100
index fell 1.2% to 5,237.90.
On the currency front, the euro
surged to a new all-time high versus the dollar, surging as high as
$1.6036, as the greenback saw a broad decline against major currencies
on intensifying credit worries. The previous all-time high, set earlier
this year, was seen near $1.6020.
On the economic front, U.K?s
office for National Statistics (ONS) revealed that CPI inflation in
June was up 3.8 percent from the year before, the highest rate since
official records began in 1997 -- in an historically constructed
series, the ONS said June's rate was last higher in May 1992. The
statistics office said the main reason behind the spike in June's
inflation rate was soaring food prices, with food and non-alcoholic
beverages up 9.5 percent over the year, the highest rate since records
began in January 1997.
On a monthly rate, the ONS said CPI was
up 0.7 percent, higher than May's 0.6 percent, and way ahead of
analysts' expectations for a 0.4 percent increase.
Meanwhile the
core rate, which strips out energy, food, alcohol and tobacco prices,
was up an expected 1.6 percent over the year, against May's 1.5
percent. June's rate was the highest since August 2007, when it was 1.8
percent.
Adding more concern, the sentiment among German
financial analysts and institutional investors plummeted to its lowest
level on record in July on rising oil and consumer prices and concern
about the U.S. financial crisis.
According to a survey from the
Center for European Economic Research, or ZEW the economic expectations
index fell to -63.9 from -52.4 points in July - the lowest level since
records for the index began.
Looking ahead the markets will now
focus on the US producer price index for June as well as the retail
sales reports, which are scheduled for release in the New York morning.
Investors also look forward to the Fed Chairman Ben Bernanke's
testimony before the Senate Banking Committee later in the day to see
how he would refer to monetary policy and the U.S. economy. The Canada
will release its new motor vehicle sales figure, which will be followed
by the interest rate decision of Bank of Canada.
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Asian Markets Register Broad Based Decline
Asian
markets tumbled across the board, extending their poor run and pulling
down regional indexes, on persistent worries about the health of the
U.S. financial sector. Taiwanese and Japanese financials were hit
especially hard on reports about their exposure to troubled U.S.
mortgage giants Freddie Mac and Fannie Mae.
Overnight, the Dow
Jones Industrial Average fell 0.4% to 11,055.19, the Nasdaq Composite
gave up 1.2% to 2,212.87 and the S&P 500 index dropped 0.9% to
1,228.30 as uncertainty reigned in the wake of the failure of IndyMac
Bancorp and the government rescue of mortgage-finance giants Fannie Mae
and Freddie Mac.
On the currency front, the U.S. dollar was
mixed against major Asian currencies. The greenback opened higher
against the South Korean won at 1,005.0 a dollar, but was trading
weaker at lower 106-yen levels in early Tokyo deals. The Australian
dollar opened stronger at US$0.9716-0.9719 after hitting a fresh
25-year high on Monday. In early trades, the kiwi was buying US$0.7636
compared to US$0.7612 at close on Monday.
Coming back in Asian
equities the benchmark Nikkei 225 index closed down 1.96% at 12,754.56.
The index slipped below the 13,000 mark for the first time since April
15. The broader Topix index fell 2.2% to finish at 1,253.12.
On
the economic front, Bank of Japan's policy board, meanwhile,
unanimously decided to keep the key policy rate unchanged at 0.5%. The
central bank said in its monthly report on economic and financial
developments for June that the domestic economy was slowing due to
rising energy and material costs and said that although the economy
will likely continue to slow for a while, it will begin to grow
gradually after that.
China's Shanghai Composite dropped 3.4% to
2,779.45. In Hong Kong, the Hang Seng Index lost 3.8% to 21,174.77,
while the Hang Seng China Enterprises Index slumped 4.7% to 11,687.32.
South
Korean market sank with the key Kospi falling to 15-month lows. The
market started off weak, tracking a weak lead for the U.S., and
extended losses for a second straight session on weakness in the Asian
region and higher crude oil prices. Reports that South Korean financial
companies had a preliminary $550 million in total exposure to the
struggling Fannie Mae and Freddie Mac also added to the gloom.
The
benchmark Kospi tumbled 3.2% to end at 1,509.33. The index closed its
lowest close since April 2007 and recorded its biggest single-day
percentage drop since February.
Meanwhile, South Korea's revised
trade deficit widened to US$430 million from an earlier estimate of
$280 million in June due mainly to increased oil imports, government
report showed Tuesday. Exports were revised downward to $37.32 billion
in June from the previous $37.44 billion, while imports reached $37.75
billion, up from an earlier estimate of $37.72 billion.
Elsewhere,
Singapore's Straits Times Index fell 2.5% to 2,830.75 while Taiwan's
weighted index was down 4.5% at 6,834.24. Malaysia's KLCI was down 1.4%
to finish at 1,127.60.
The Australian stock market fell
extending yesterday's 1.2% losses after Wall Street closed lower for a
second day on lingering concerns about the U.S. credit market crisis.
Energy stocks and gold miners mostly gained as oil stayed near a record
and the precious metal surged overnight.
The benchmark
S&P/ASX200 index closed down 2.1% at 4,815.7, hitting its lowest
closing level in two and a half years. The index has dropped 24% since
the beginning of the year, putting it on course to post its first
annual loss since 2002. The broader All Ordinaries lost 97.8 points or
2.0% to finish at 4,910.1.
On the economic front, minutes of the
Reserve Bank of Australia's July meeting showed that the central bank
is growing more confident that decade-high interest rates will restrain
future inflation, reinforcing views monetary policy is on hold.
In
addition to this the Australian Bureau of Statistics reported that the
value of construction work done in Australia fell sequentially in the
first quarter, reflecting a decline in all types of construction
activities. The total value of construction activity declined a
seasonally adjusted 1% to A$16.48 billion in the first quarter compared
to the previous quarter.
The New Zealand stock market closed
sharply lower, extending Monday's 1.35% decline. The market opened on a
firm note, but slipped into negative territory following the release of
worse-than-expected inflation data. The benchmark NZX 50 Index closed
down 1.3% at 3,040.5, hitting a new three-year low.
According
to the data released by Statistics New Zealand showed that New
Zealand's consumer price index or CPI jumped 1.6% in the second
quarter, recording the largest quarterly rise in eighteen years.
Analysts expected CPI to rise 1.4%. For the year, inflation hit 4.0%
against market expectation for a 3.8% increase.
Statistics New
Zealand also said that food prices increased 1.3% in June. Food prices
rose 2.2% in the June quarter. On an annual basis, food prices rose
8.2%, the highest in 18 years.
The Indian market is currently
extending losses after opening on a weak note. Amid negative global
cues over concerns about the fallout from the credit crisis and
continued selling from foreign funds, traders are hesitating to make
fresh buying. After opening down 263 points, the BSE Sensex is
currently trading at 12,673, down 657 points or 4.9% over the previous
day's close. Meanwhile, the S&P CNX Nifty index is down 180 points
or 4.5%.
Turning toward European markets, which traded sharply
lower as the series of negative economic events hit the markets hard.
In the opening trade, the German DAX 30 index fell 1.5% to 6,105.13,
the French CAC-40 index dropped 1.4% to 4,083.22 and the U.K. FTSE 100
index fell 1.2% to 5,237.90.
On the currency front, the euro
surged to a new all-time high versus the dollar, surging as high as
$1.6036, as the greenback saw a broad decline against major currencies
on intensifying credit worries. The previous all-time high, set earlier
this year, was seen near $1.6020.
On the economic front, U.K?s
office for National Statistics (ONS) revealed that CPI inflation in
June was up 3.8 percent from the year before, the highest rate since
official records began in 1997 -- in an historically constructed
series, the ONS said June's rate was last higher in May 1992. The
statistics office said the main reason behind the spike in June's
inflation rate was soaring food prices, with food and non-alcoholic
beverages up 9.5 percent over the year, the highest rate since records
began in January 1997.
On a monthly rate, the ONS said CPI was
up 0.7 percent, higher than May's 0.6 percent, and way ahead of
analysts' expectations for a 0.4 percent increase.
Meanwhile the
core rate, which strips out energy, food, alcohol and tobacco prices,
was up an expected 1.6 percent over the year, against May's 1.5
percent. June's rate was the highest since August 2007, when it was 1.8
percent.
Adding more concern, the sentiment among German
financial analysts and institutional investors plummeted to its lowest
level on record in July on rising oil and consumer prices and concern
about the U.S. financial crisis.
According to a survey from the
Center for European Economic Research, or ZEW the economic expectations
index fell to -63.9 from -52.4 points in July - the lowest level since
records for the index began.
Looking ahead the markets will now
focus on the US producer price index for June as well as the retail
sales reports, which are scheduled for release in the New York morning.
Investors also look forward to the Fed Chairman Ben Bernanke's
testimony before the Senate Banking Committee later in the day to see
how he would refer to monetary policy and the U.S. economy. The Canada
will release its new motor vehicle sales figure, which will be followed
by the interest rate decision of Bank of Canada.
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