19 Aug 2008 | 16:35
Downward Trend Remain Intact In Asian Markets
The
stock markets across the Asian region were trading sharply lower after
Wall Street tumbled overnight amid weakness in the financial sector.
Mortgage giants Fannie Mae and Freddie Mac plunged more than 20% fears
that the U.S. treasury might have to bail out the lenders and banks
fell on the back of weak housing sentiment data. Overnight, the Dow
fell 1.55% on news that the U.S. Government might have to bail out
mortgage finance giants Fannie Mae and Freddie Mac. The S&P 500
shed 1.51% and the Nasdaq lost 1.45%.
Oil settled lower on
Monday as fears over a storm in the Gulf of Mexico eased. In Asian
deals, crude oil has eased further to $112.02 a barrel by 2:07 a.m ET,
after settling down $0.90 at $112.87 a barrel overnight on the New York
Mercantile Exchange. Crude ended below $113 for the first time since
May 1.
In the currency market, the U.S. dollar traded in the
upper 109-yen levels in late Tokyo deals. The greenback was quoted at
109.99-110.01 yen, down 0.26 yen from Monday's close of 110.25-110.26
yen in Tokyo.
The South Korean won fell against the greenback.
The local unit fell to 1,049.4 a dollar, its lowest level in more than
six weeks, on increased demand for the dollar from importers and
foreign investors who sold local shares. On Monday, the won closed at
1,046.9 a dollar.
The Australian dollar closed weaker after a
drop in the euro and gold prices boosted the U.S. dollar. The release
of the minutes of the Reserve Bank of Australia's August 5 board
meeting hardly impacted the domestic currency, as the market had
already factored in a September interest rate cut. The local unit
finished the session at US$0.8642-0.8645, down from Monday's close of
US$0.8746-0.8750.
The New Zealand dollar retreated from 11-day
highs on risk aversion following steep losses across global equity
markets. The kiwi finished the local session at US$0.7080-0.7086, down
US$0.7085-0.7109 in late local trade Monday.
The Japanese market
closed sharply lower, reversing yesterday's gains. The benchmark Nikkei
225 index closed down by 2.28% taking the index to a one-month low of
12,865.05. The broader Topix index of all the First Section issues on
the Tokyo Stock Exchange lost 2.23% to finish at 1,235.54.
The
Bank of Japan's policy board members voted unanimously to leave
interest rates steady, but cut their views on Japan's economy, as it
became increasingly apparent that the economy has entered a downturn
both at home and abroad. The board agreed to keep the unsecured
overnight call loan rate unchanged at 0.50%, the lowest level among
Group of Seven nations, marking the 10th consecutive unanimous vote.
The
Chinese market closed higher, rebounding from yesterday's 5.34% plunge,
led by power producers and banks. Banks got a boost after China
Merchants Bank reported better-than-expected first-half earnings, while
power firms gained on hopes for further tariff hikes. On Mainland
China, the Shanghai Composite gained 1.06% to 2,344.47 and the Shenzhen
All Share index rose 1.3% to 664.73, recouping part of the losses from
the previous session.
However Hong Kong continued to trade in
negative, the Hang Seng China Enterprises Index declined 2.30% to
10,714.44, while the benchmark Hang Seng Index gave up 2.13% to
20,484.37.
The South Korean market plunged, extending
yesterday's losses, as investors locked in profits following renewed
U.S. credit concerns and a global economic slowdown. The benchmark
Korea Composite Stock Price Index or Kospi fell 1.68% to finish at
1,541.41.
On the economic front, the Bank of Korea said in a
report that South Korea's corporate bankruptcies increased to 209 in
July from 191 recorded in June. According to the central bank, the
number of failed companies in South Korea's service sector increased 23
to 97, while, bankruptcies in the manufacturing sector decreased 11 to
56 and in the construction sector, it fell to 42 from 46.
The
Australian stock market closed sharply lower, with both the financial
and resources sectors ending in the red. The benchmark S&P/ASX 200
index closed down 2.4% at 4,866.4, its lowest close since August 5. The
broader All Ordinaries index dropped 113.1 points or 2.2% to finish at
4,930.4.
On the economic front, the minutes of the Reserve Bank
of Australia's August 5 policy meeting showed that the central bank was
poised to consider a drop from the current 12-year high cash rate of
7.5%. The Reserve Bank of Australia Policy Board thinks that an
interest rate reduction might be necessary to help steer the nation's
economy away from a deeper economic slowdown. The Board's next meeting
is scheduled for September 2.
Meanwhile, the Australian Bureau
of Statistics reported that merchandise imports in Australia increased
in July to A$19.66 billion from a revised A$17.52 billion in June.
The
New Zealand stock market closed lower for the second straight session.
The market started off lower, tracking the plunge overnight on Wall
Street amid renewed U.S. credit fears, but recovered some ground in the
afternoon session. The benchmark NZX 50 index closed down 0.44% at
3,319.60, off day's low of 3,303.76. The broader NZX All Capital index
lost 0.25% to finish at 3,346.11.
On the economic front,
Statistics New Zealand said that Capital Goods Price Index, or CGPI,
increased 1% in the second quarter from the previous quarter due to
jumps in prices for plant, machinery and equipment as well as costs for
construction of new houses. On year-over-year basis, the June-quarter
CGPI increased 3.1%.
Statistics New Zealand also reported that
producer prices increased sharply in the second quarter of 2008.
Producer input prices, which exclude farm and factory labor, rose 5.6%
from the first quarter, while output prices increased 3.5%. The
increases were the fastest in more than 20 years. On an annualized
basis, input prices jumped 11.8% and output prices rose 8.5%.
In
India, the markets recovered in late trade to end marginally lower.
Sensex recovered close to 230 points a fresh intra-day low hit during
mid-afternoon trade. The BSE 30-share Sensex provisionally ended down
41.55 points or 0.28% to 14,604.11. At day?s high of 14,604.11, the
index lost 41.55 points in late trade. At the day?s low of 14,368.72,
the Sensex lost 276.94 in mid-afternoon trade.
Elsewhere,
Taiwan's weighted index was down 0.32% to 7,000.74 while Singapore's
Straits Times index was fell by 1.75% to 2,728.39. In Malaysia the KLSE
Composite Index was down by 1.38% to 1,069.42. In Indonesia, the
Jakarta Composite fell by 2.05% to 2,042.50.
In the other part
of the world, European shares fell again, led lower by financials amid
growing worries about the health of the sector after reports that the
U.S. government will have to bail out U.S. mortgage giants Fannie Mae
and Freddie Mac.
Tracking the globe it was a similar story
around the regions in Europe following the Asian market lower closing.
The U.K. FTSE 100 index dropped 1.3% to 5,380.40, the German DAX 30
index lost 1.2% to 6,355.11 and the French CAC-40 index fell 1.7% to
4,373.07.
However on the economic front it seems to be a good
day as sentiment among German financial analysts and institutional
investors improved in August on declining oil prices and a weaker euro.
According to a survey from the Center for European Economic Research,
or ZEW, the think tank's economic expectations index rose to -55.5
points from -63.9 points in July, and lower than its historical average
of 28.3 points.
But survey participants assessed current
economic conditions as sharply less favorable. The corresponding
indicator dropped 26.2 points to -9.2 points. That marks the lowest
level since February 2006, when the indicator stood at -19.5 points.
On
the other hand, German producer prices rose faster than expected in
July, reaching the highest annual rate in nearly 27 years. The producer
price index, which measures prices at the factory gate, rose 2.0% on
the month and 8.9% on the year. The last time prices accelerated as
quickly was in October 1981, when prices were up 9.1% on the year, the
office added. The July rise builds on gains in June, when producer
prices were up 0.9% from May and 6.7% from a year earlier.
As
in previous months, energy accounted for the bulk of the July increase
- energy prices were up 5.1% from June and 24.5% from a year earlier.
Stripping out energy prices, producer prices were up only 3.6% from
July 2007, the office added.
Looking ahead the day is scheduled
to release some important data of the week. First of all it will
release housing starts and building permit data on US housing sector.
However the focus of the day will be on the Producer price index of US
for the month of July, which will show inflation level at factory gate.
It will be accompanied by wholesale sales from Canada. In the late
evening we have all industry activity index from Japan for the month of
June.
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Downward Trend Remain Intact In Asian Markets
The
stock markets across the Asian region were trading sharply lower after
Wall Street tumbled overnight amid weakness in the financial sector.
Mortgage giants Fannie Mae and Freddie Mac plunged more than 20% fears
that the U.S. treasury might have to bail out the lenders and banks
fell on the back of weak housing sentiment data. Overnight, the Dow
fell 1.55% on news that the U.S. Government might have to bail out
mortgage finance giants Fannie Mae and Freddie Mac. The S&P 500
shed 1.51% and the Nasdaq lost 1.45%.
Oil settled lower on
Monday as fears over a storm in the Gulf of Mexico eased. In Asian
deals, crude oil has eased further to $112.02 a barrel by 2:07 a.m ET,
after settling down $0.90 at $112.87 a barrel overnight on the New York
Mercantile Exchange. Crude ended below $113 for the first time since
May 1.
In the currency market, the U.S. dollar traded in the
upper 109-yen levels in late Tokyo deals. The greenback was quoted at
109.99-110.01 yen, down 0.26 yen from Monday's close of 110.25-110.26
yen in Tokyo.
The South Korean won fell against the greenback.
The local unit fell to 1,049.4 a dollar, its lowest level in more than
six weeks, on increased demand for the dollar from importers and
foreign investors who sold local shares. On Monday, the won closed at
1,046.9 a dollar.
The Australian dollar closed weaker after a
drop in the euro and gold prices boosted the U.S. dollar. The release
of the minutes of the Reserve Bank of Australia's August 5 board
meeting hardly impacted the domestic currency, as the market had
already factored in a September interest rate cut. The local unit
finished the session at US$0.8642-0.8645, down from Monday's close of
US$0.8746-0.8750.
The New Zealand dollar retreated from 11-day
highs on risk aversion following steep losses across global equity
markets. The kiwi finished the local session at US$0.7080-0.7086, down
US$0.7085-0.7109 in late local trade Monday.
The Japanese market
closed sharply lower, reversing yesterday's gains. The benchmark Nikkei
225 index closed down by 2.28% taking the index to a one-month low of
12,865.05. The broader Topix index of all the First Section issues on
the Tokyo Stock Exchange lost 2.23% to finish at 1,235.54.
The
Bank of Japan's policy board members voted unanimously to leave
interest rates steady, but cut their views on Japan's economy, as it
became increasingly apparent that the economy has entered a downturn
both at home and abroad. The board agreed to keep the unsecured
overnight call loan rate unchanged at 0.50%, the lowest level among
Group of Seven nations, marking the 10th consecutive unanimous vote.
The
Chinese market closed higher, rebounding from yesterday's 5.34% plunge,
led by power producers and banks. Banks got a boost after China
Merchants Bank reported better-than-expected first-half earnings, while
power firms gained on hopes for further tariff hikes. On Mainland
China, the Shanghai Composite gained 1.06% to 2,344.47 and the Shenzhen
All Share index rose 1.3% to 664.73, recouping part of the losses from
the previous session.
However Hong Kong continued to trade in
negative, the Hang Seng China Enterprises Index declined 2.30% to
10,714.44, while the benchmark Hang Seng Index gave up 2.13% to
20,484.37.
The South Korean market plunged, extending
yesterday's losses, as investors locked in profits following renewed
U.S. credit concerns and a global economic slowdown. The benchmark
Korea Composite Stock Price Index or Kospi fell 1.68% to finish at
1,541.41.
On the economic front, the Bank of Korea said in a
report that South Korea's corporate bankruptcies increased to 209 in
July from 191 recorded in June. According to the central bank, the
number of failed companies in South Korea's service sector increased 23
to 97, while, bankruptcies in the manufacturing sector decreased 11 to
56 and in the construction sector, it fell to 42 from 46.
The
Australian stock market closed sharply lower, with both the financial
and resources sectors ending in the red. The benchmark S&P/ASX 200
index closed down 2.4% at 4,866.4, its lowest close since August 5. The
broader All Ordinaries index dropped 113.1 points or 2.2% to finish at
4,930.4.
On the economic front, the minutes of the Reserve Bank
of Australia's August 5 policy meeting showed that the central bank was
poised to consider a drop from the current 12-year high cash rate of
7.5%. The Reserve Bank of Australia Policy Board thinks that an
interest rate reduction might be necessary to help steer the nation's
economy away from a deeper economic slowdown. The Board's next meeting
is scheduled for September 2.
Meanwhile, the Australian Bureau
of Statistics reported that merchandise imports in Australia increased
in July to A$19.66 billion from a revised A$17.52 billion in June.
The
New Zealand stock market closed lower for the second straight session.
The market started off lower, tracking the plunge overnight on Wall
Street amid renewed U.S. credit fears, but recovered some ground in the
afternoon session. The benchmark NZX 50 index closed down 0.44% at
3,319.60, off day's low of 3,303.76. The broader NZX All Capital index
lost 0.25% to finish at 3,346.11.
On the economic front,
Statistics New Zealand said that Capital Goods Price Index, or CGPI,
increased 1% in the second quarter from the previous quarter due to
jumps in prices for plant, machinery and equipment as well as costs for
construction of new houses. On year-over-year basis, the June-quarter
CGPI increased 3.1%.
Statistics New Zealand also reported that
producer prices increased sharply in the second quarter of 2008.
Producer input prices, which exclude farm and factory labor, rose 5.6%
from the first quarter, while output prices increased 3.5%. The
increases were the fastest in more than 20 years. On an annualized
basis, input prices jumped 11.8% and output prices rose 8.5%.
In
India, the markets recovered in late trade to end marginally lower.
Sensex recovered close to 230 points a fresh intra-day low hit during
mid-afternoon trade. The BSE 30-share Sensex provisionally ended down
41.55 points or 0.28% to 14,604.11. At day?s high of 14,604.11, the
index lost 41.55 points in late trade. At the day?s low of 14,368.72,
the Sensex lost 276.94 in mid-afternoon trade.
Elsewhere,
Taiwan's weighted index was down 0.32% to 7,000.74 while Singapore's
Straits Times index was fell by 1.75% to 2,728.39. In Malaysia the KLSE
Composite Index was down by 1.38% to 1,069.42. In Indonesia, the
Jakarta Composite fell by 2.05% to 2,042.50.
In the other part
of the world, European shares fell again, led lower by financials amid
growing worries about the health of the sector after reports that the
U.S. government will have to bail out U.S. mortgage giants Fannie Mae
and Freddie Mac.
Tracking the globe it was a similar story
around the regions in Europe following the Asian market lower closing.
The U.K. FTSE 100 index dropped 1.3% to 5,380.40, the German DAX 30
index lost 1.2% to 6,355.11 and the French CAC-40 index fell 1.7% to
4,373.07.
However on the economic front it seems to be a good
day as sentiment among German financial analysts and institutional
investors improved in August on declining oil prices and a weaker euro.
According to a survey from the Center for European Economic Research,
or ZEW, the think tank's economic expectations index rose to -55.5
points from -63.9 points in July, and lower than its historical average
of 28.3 points.
But survey participants assessed current
economic conditions as sharply less favorable. The corresponding
indicator dropped 26.2 points to -9.2 points. That marks the lowest
level since February 2006, when the indicator stood at -19.5 points.
On
the other hand, German producer prices rose faster than expected in
July, reaching the highest annual rate in nearly 27 years. The producer
price index, which measures prices at the factory gate, rose 2.0% on
the month and 8.9% on the year. The last time prices accelerated as
quickly was in October 1981, when prices were up 9.1% on the year, the
office added. The July rise builds on gains in June, when producer
prices were up 0.9% from May and 6.7% from a year earlier.
As
in previous months, energy accounted for the bulk of the July increase
- energy prices were up 5.1% from June and 24.5% from a year earlier.
Stripping out energy prices, producer prices were up only 3.6% from
July 2007, the office added.
Looking ahead the day is scheduled
to release some important data of the week. First of all it will
release housing starts and building permit data on US housing sector.
However the focus of the day will be on the Producer price index of US
for the month of July, which will show inflation level at factory gate.
It will be accompanied by wholesale sales from Canada. In the late
evening we have all industry activity index from Japan for the month of
June.
Visit our site at – http://investorline.co.in/
Newsromm - http://newsroom.investorline.co.in/
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Mutual funds - http://mutualfunds.investorline.co.in/
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Latest News - http://investorline.co.in/blogger/?q=aggregator/categories/1
News Resources - http://investorline.co.in/blogger/?q=aggregator/sources
Newscatcher- http://catcher.investorline.co.in/
Newsgroups- http://groups.google.com/group/india-investor
Visit site at – http://investorline.co.in/
Newsroom - http://newsroom.investorline.co.in/
Learning Center- http://learning.investorline.co.in/
Mutual funds - http://mutualfunds.investorline.co.in/
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