Asian Markets Remain Weak For A Second Day
The stock markets across the Asian region ended lower for a second day
after Wall Street plunged overnight on concerns that investment bank
Lehman Brothers might find it difficult to raise capital. A report said
that its high-level talks with the Korea Development Bank had broken
down. Energy stocks plunged after oil prices fell to a five-month low
as Hurricane Ike shifted away from Gulf Coast oil installations. The
Dow Industrials closed down 280 points or 2.43% at 11,231, the Nasdaq
lost 60 points or 2.64% to 2,210 and the broader S&P 500 fell 43
points or 3.41% to 1,225.
In
the energy market, crude oil edged higher, reversing early losses,
after OPEC announced a modest reduction in its production quota. In the
Asian session, Oil was up $0.502 at $103.76 a barrel by 4:23 a.m. ET
after the contract for October settlement plunged $3.08 overnight to
settle at $103.26 a barrel in New York on Tuesday.
On the
currency front, the U.S. dollar traded in the lower 107-yen levels in
early Tokyo deals, down from Tuesday's close in the upper 107-yen
range. The U.S. dollar traded at 107.25-107.28 yen in late Tokyo deals,
slightly higher compared to early morning quotes of 107.12-107.14- yen,
but down 58 yen from Tuesday's close of 107.78-107.81 yen. The dollar
lost ground following weakness in the U.S. financial sector
The
South Korean won strengthened as authorities sold dollar to lift the
local currency. However, it came of the day's high of 1,081.9 a dollar
hit in early trade to finish the session at 1,095.5 a dollar, up from
Tuesday's domestic close of 1,101.3 a dollar.
The Australian
dollar hit a fresh one-year low beneath US$0.80 on worries about the
future of U.S. investment bank Lehman Brothers. In late trade, the
Aussie traded at $0.8075, bouncing back from a one-year low of $0.7985.
The local unit finished Tuesday's session at US$0.8112-0.8116. The New
Zealand dollar strengthened against the U.S. dollar. In late local
trades, the kiwi was quoted at US$0.6695, up from US$0.6660 in early
deals and US$0.6629 late Tuesday.
Coming back in equities, the
Japanese market closed mixed on Wednesday after closing sharply lower
yesterday. Wall Street plunged overnight on fears that the major U.S.
brokerage Lehman Brothers Holdings may have difficulty in raising funds
for its survival. A report indicated that Lehman's high-level talks
with the Korea Development Bank had broken down. After starting off
sharply lower, the Japanese market trimmed its losses going into the
close of the trading session on hopes that Lehman Brothers might
provide a positive surprise in its earnings scheduled for release later
in the day.
Most exporters fell on the back of a stronger yen,
while miners and trading houses declined following a fall in oil
prices. The benchmark Nikkei 225 index closed down 0.4% at 12,346.63,
but the broader Topix index of all the Tokyo Stock Exchange First
Section issues rose 0.1% to finish at 1,192.38.
On the economic
front, Japan's domestic corporate goods price index increased by 7.2%
on year in August to 112.1, the Bank of Japan said. On a monthly basis,
the CGPI was down 0.1% in August compared to expectations for a 0.1%
gain.
Meanwhile, Japan's preliminary trade balance, on a balance
of payments basis, totaled 232.2 billion yen in July, despite forecasts
for a fall to 221.0 billion yen from June's total of 252.1 billion yen.
Exports were 7.3 trillion yen compared to the previous 6.8 trillion
yen, recording an annual rise of 8.7%. On an adjusted basis, the
merchandise trade balance for July was 348.1 billion yen, up 175.8%
from June's 126.2 billion yen.
Japan's current account totaled
1.5 trillion yen in July, higher than the consensus for an increase to
1.3 trillion yen from June's 493.9 billion yen. The adjusted current
account total was also higher than expected 1.6 trillion yen compared
to forecasts for a 1.35 trillion yen and last month's 1.3 trillion yen.
Additionally,
Japan's leading index increased to 91.6 in July from 91.0 in June, the
Cabinet Office said in its preliminary report on Wednesday. The index
improved after recording decreases in the past two months. Economists
had expected the index to climb to 91.9.
The Chinese market
closed slightly higher on the back of better-than-expected August
consumer price index. While brokerages rose on expectations of the
imminent launch of margin trading, coal stocks and banks lost ground.
The benchmark Shanghai Composite Index closed up 0.23% at 2,150.76, off
a high of 2,185.69 and a 21-month low of 2,102.91. In Shenzhen, the All
Share index climbed 0.47% to 588.31.
On the economic front, the
Inflation eased to 4.9% on year in August from 6.3% in July, its lowest
level in 14 months, the National Bureau of Statistics said. However,
the producer price index rose 10.1 on year in August, following a rise
of 10.0% in July.
On the other hand, the trade surplus in August
rose 14.9% from a year earlier, as imports growth decelerated sharply
on lower commodities prices. The surplus last month was 28.69 billion
U.S. dollars, posting gains for the second month in a row. The figure
was 25.28 billion U.S. dollars in July and 24.97 billion dollars last
August. Exports in August jumped 21.1 percent to 134.87 billion
dollars, compared with 26.9 percent in July. Imports climbed 23.1 to
106.18 billion dollars, down from 33.7 percent in July.
In
another data release from the same house, Chinese total investment in
fixed asset continued to show upward movement in the month of August.
From January to August, total investment in fixed assets in urban areas
stood at 8,492.0 billion Yuan, a rise of 27.4%, year-on-year.
The
Hang Seng China Enterprises tracked Shanghai stocks lost 3.10% to
10,491.40 while the benchmark Hang Seng index closed down 2.40% at
19,999.78.
The Australian stock market closed lower for a second
day on Wednesday. Wall Street's plunge overnight, on concerns that
investment bank Lehman Brothers might find it difficult to raise
capital after reports indicated that its high-level talks with the
Korea Development Bank had broken down, dented investor sentiment.
However, the market came off the lows for the day, as banks either
trimmed their losses or moved back into positive terrain. The continued
decline in commodity prices also weighed on the market.
The
benchmark S&P/ASX 200 index closed down 1.5% at 4,905.5, extending
Tuesday's 1.7% loss. The broader All Ordinaries index lost 1.6% to
finish at 4,961.4.
On the economic front, the Westpac-Melbourne
Institute consumer sentiment index rose by a seasonally adjusted 7% or
6 points in September to 92.2 index points from last month. The index
rose 9.1% in August. The consumer sentiment reading has improved for
two successive months since reaching a 16-year low in July.
Meanwhile,
the Australian Bureau of Statistics said that new lending commitments
fell by 1.3% in July, on a seasonally adjusted basis, marking the sixth
consecutive monthly decline. Lending commitments were down 17% from a
year ago.
The New Zealand stock market closed lower on Wednesday,
following Tuesday's mixed finish. Wall Street's plunge overnight, on
renewed concerns about the health of the U.S. financial sector, dented
investor sentiment. The benchmark NZX 50 index closed down 0.97% at
3,343.86 and the broader NZX All Capital index fell 0.85% to finish at
3,379.38.
On the economic front, the Statistics New Zealand said
that New Zealand's merchandise terms of trade for the second quarter of
2008 declined in value by 0.5% from the previous quarter. Merchandise
export prices increased 4.4% while import prices rose 4.8%. In terms of
volume, merchandise exports were down a seasonally adjusted 3.7%, with
merchandise import volumes rising 5.4%.
Additionally, data
released by the Real Estate Institute of New Zealand showed that house
sales plummeted to their lowest level in at least 26 years in August. A
total of 4,220 houses were sold in August, down from 4,489 sold in
August last year. The national median selling price declined to
NZ$330,000 in August from NZ$340,000 in June and July, the Institute
said.
The South Korean market closed higher Wednesday, reversing
early losses. The market started off sharply lower, losing as much as
1.7% in early trade, but staged a recovery as bargain hunting set in
following recent losses. The benchmark Korea Composite Stock Price
Index closed up 0.7% at 1,464.98, after hitting a low of 1,430.05,
reversing yesterday's 1.5% losses.
On the economic front, South
Korea's National Statistical Office said in a report that the nation's
unadjusted jobless rate remained stable at 3.1% in August from July.
This is for the second straight month the rate is remaining unchanged.
Similarly, the seasonally adjusted unemployment rate was unchanged at
3.2%. The jobless rate stood steady for the fourth month in a row.
Meanwhile,
the Bank of Korea reported that South Korea's money supply grew at a
faster pace of 13.2% year-on-year in July. L, which is the broadest
measure of money supply, rose 12.7% in June.
In India, the key
benchmark indices cut losses in late trade led by recovery in banking
stocks. The BSE 30-share Sensex slipped 243.23 points. Weak global
markets weighed on the domestic bourses. The S&P CNX Nifty slipped
below the 4,400 level. Volatility was high. The BSE 30-share Sensex
slipped 243.23 points or 1.63% to 14,657.63, as per provisional
closing. It opened 188.23 points lower at 14,717.53. At the day's low
of 14,609.83 hit in late trade, the Sensex lost 290.93 points. At the
day?s high of 14,866.32 hit in mid-morning trade, the Sensex fell 34.44
points. The S&P CNX Nifty slipped 68.85 points or 1.54% to 4,399.85
as per provisional closing
Elsewhere, Taiwan's Taiex increased by
0.52% at 6,458.01; Singapore's Strait Times declined by 1.90% at
2,622.41. The Indonesian Jakarta Composite index closed down 3.76% at
1,885.04. The Malaysian KLSE Composite declined by 0.55% to 1,062.70.
In
the other part of the world, European shares fell, with financials such
as Royal Bank of Scotland under renewed pressure as worries about
capital came back to the fore following news that Lehman Brothers had
failed to secure a capital injection from the Korea Development Bank.
Of
national indexes, The U.K. FTSE 100 index fell 1.3% to 5,345.50, the
German DAX 30 index lost 0.7% to 6,192.83 and the French CAC-40 index
declined 0.6% to 4,267.00. At 12.08 GMT all this national indices
continued with their negative positions as U.K. FTSE 100 index was down
by 0.69% to 5,378.30. The German DAX 30 index was down by 0.18% to
6,221.92, while the French CAC-40 index was up by 0.06% to 4,295.74.
On
the economic front U.K?s global goods deficit narrowed in July in what
could be the first sign that the weaker pound is helping the country's
exporters, but economists doubted the contribution to growth would be
enough to prevent the economy from slowing further.
The global
goods deficit shrank to GBP7.7 billion in July from an upwardly revised
GBP8.0 billion in June. The data showed total exports of goods rose
3.0% on the month to GBP22.5 billion in July, while total imports grew
1.0% to GBP30.2 billion. In the three months to the end of July,
exports rose 7.5% while imports 6.0%.
In Italy, the economy
contracted by 0.3% in the second quarter compared with the previous
three months and gross domestic product fell 0.1 percent from a year
earlier.
Looking ahead the day is scheduled to release weekly
report on mortgage operation from MBA, which will be followed, by labor
productivity report from Canada. In the evening we have EIA?s weekly
report on crude oil stocks. In the late evening we have interest rate
decision from New Zealand, which will be followed by the food price
index for the month of August.
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