08 Jul 2008 | 15:31
Selling Resume for Asian Equities As investors Sentiment Still Jittery
The
stock markets of Asian region were trading mostly lower after Wall
Street closed lower overnight. The financial sector was weak after
Lehman Brothers estimated that a proposed accounting rule would force
U.S. mortgage providers Fannie Mae and Freddie Mac to raise as much as
$75 billion between them, while a pullback in crude oil prices hurt
energy stocks.
Markets also got a momentum from G-8 nations
admitted that the soaring oil and food prices pose a serious challenge
to stable worldwide economic growth. At their meeting in Japan, the
leaders also called for an increase in oil production and refining
capacity to help stem soaring prices.
Oil prices rose in Asian
trading on Tuesday while leaders of the world's rich industrial nations
warned of the dangers of soaring oil prices and called for an increase
in oil production.
New York's main oil futures contract, light
sweet crude for August delivery, was 91 cents higher at $142.28 a
barrel after slumping $3.92 to close at $141.37 on yesterday at the New
York Mercantile Exchange.
Brent North Sea crude for August was $1.09 higher at $142.96 from a drop of $2.55 to $141.87 a barrel Yesterday in London.
However
the oil prices tumbled nearly $4 a barrel on yesterday, as concerns
about supply disruptions eased. Light, sweet crude for August delivery
fell nearly 2.7% to settle at $141.37 on the New York Mercantile
Exchange.
In the regional stock markets, the Hang Seng Index
skidded 3.2% to 21,220.81 and the Hang Seng China Enterprises index
tumbled 3.6% to 11,293.32, giving up gains from the previous session.
China's
benchmark Shanghai Composite has lost nearly 47% of its value so far in
2008. After surging 4.6% on yesterday, the Shanghai Composite recently
rose 0.8% to 2,814.95, but was off the day's high at 2,843.43.
The
Nikkei 225 Average lost 2.5% to 13,033.10, giving up more than the 0.9%
it added during the previous session to snap out of a 12-session losing
streak -- its longest in 54 years. The broader Topix index fell 2.2% to
1,283.51.
A series of economic data released today, the Bank of
Japan said that Japan's M2 gauge for money supply increased by 2.3% in
June, faster than May's 2.1% growth and 2.0% growth expected by
economists. M3, which combines M2 with CDs, time deposits, fixed
savings and foreign currency deposits at all financial institutions
including Japan Post Bank, rose 0.9% in June, after increasing 0.7% in
May.
Meanwhile, lending by Japanese banks, excluding Shinkin
banks, rose by 2.0% in June from a year earlier to 393.005 trillion
yen, following a 1.6% gain in May. Bank lending has risen for 29 months
in a row.
Additionally, Japan's economy watchers' index, which
measures workers' perception of economic trends, declined for the third
straight month in June. The major index for current conditions fell to
29.5 last month, lowest reading since October 2001 when the index hit
27.2, from 32.1 in May. According to the survey, higher prices of oil
and raw materials prompted companies to hold off new hiring. The
forward-looking index, which measures expectations about economic
conditions in subsequent months, dipped to 32.1 in June from 35.1 in
May.
Australia's S&P/ASX 200 slipped 1.4% to 4,932.90,
giving up early gains. On the economic front, a monthly survey released
by National Australia Bank showed that Australian business confidence
fell to the lowest level in seven years in June, with the index falling
to -9 points from -4 points in the previous month.
The New
Zealand stock market closed higher, despite a disappointing quarterly
survey of business opinion that pointed at a fall in gross domestic
product over the next two quarters. New Zealand Institute of Economic
Research or NZIER's quarterly survey of business opinion indicated that
New Zealand's business confidence, though negative, was steady at a 33
year low as the outlook of individual firms deteriorated in the second
quarter, suggesting a recession in the economy.
The data showed
that a net 64% of the country's businesses, or 54% on a seasonally
adjusted basis, felt that the general business conditions would worsen
in the coming six months. The figure compares with a net balance of 56%
of firms expecting a deteriorating business situation in the March
survey.
On a seasonally adjusted basis, the survey showed that a
net 18% of firms reported a decline in their own activity and a net 18%
expect their trading activity to fall in the next three months. The
benchmark NZX50 index closed up 1.3% at 3,160.59 reversing yesterday?s
1.2% decline.
The South Korean market slumped as investors sold
banking and other blue chip stocks on interest rate hike fears. The
Bank of Korea is scheduled to hold its monthly meeting on Thursday to
decide the monetary policy. The benchmark Kospi index tumbled 2.9% to
close the session at 1,533.47.
Elsewhere in the region, Taiwan's
weighted index fell 3.9% to 7,051.85 while Singapore's Straits Times
index fell 1.6% to 2,886.62. The Indonesian Jakarta Composite Index is
plunged by 1.1% to 2,278.97.
After opening on a weak note, the
Indian market is declining sharply pressured by weakness in the rest of
the global markets. After opening down 233 points, the BSE Sensex is
currently trading near the day's low at 13,049.96, down 476 points. The
market pared losses in early afternoon trade soon after reports
filtered in that Left parties have decided to withdraw support to the
Congress-led United Progressive Alliance government over the Indo-US
nuclear deal. The S&P CNX Nifty fell below 4,000 mark. At 12:27
IST, the 30-share BSE Sensex was down 312.69 points or 2.31% at
13,213.30. At the day?s low of 13,049.96 Sensex lost 476.03 points in
mid-morning trade. The broader based S&P CNX Nifty was down 74.15
points or 1.84% at 3,955.85.
In Asian currency trading, the U.S. dollar bought 107.07 yen, compared with 107.58 yen late yesterday.
On
Wall Street, the Dow Jones Industrial Average lost 56.58 points to
11,231.96 and the Nasdaq Composite gave up 2.06 points to 2,243.32,
while the S&P 500 index dropped 10.59 points to 1,252.31.
Stocks
in Europe fell sharply in a broad-based decline as investors worried
over financial-sector health and about how a slowing global economy
will impact demand and feed through into corporate profits
Of
national indexes, the U.K. FTSE 100 index fell 2.3% to 5,387.40, the
German DAX 30 index dropped 2.2% to 6,253.60 and the French CAC-40
index slumped 2.3% to 4,243.23.
On the economic front, the
British Chambers of Commerce warned about UK Economy, which is in
serious risk of entering technical recession by the end of the summer
as both manufacturers and services companies see their business shrink.
In
its Quarterly Economic Survey, the British Chambers of Commerce said
the UK business sector is now only a quarter away from technical
recession with homes sales and orders in both the industrial and
services sectors falling outright during the second quarter.
More
specifically, cash flow is negative and at record lows, proving that
tight credit conditions are materially hurting business, and that
confidence in the economy has slumped across the board, as have
employment expectations.
At the same time, intentions to raise
prices remain high among manufacturers, due to elevated costs of raw
materials and rising inflation.
The BCC said the downturn is
particularly noticeable in the services sector, which makes up for the
bulk of the UK economy, and that it now believes the downturn in the
economy will be longer and worse than anticipated so far.
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Selling Resume for Asian Equities As investors Sentiment Still Jittery
The
stock markets of Asian region were trading mostly lower after Wall
Street closed lower overnight. The financial sector was weak after
Lehman Brothers estimated that a proposed accounting rule would force
U.S. mortgage providers Fannie Mae and Freddie Mac to raise as much as
$75 billion between them, while a pullback in crude oil prices hurt
energy stocks.
Markets also got a momentum from G-8 nations
admitted that the soaring oil and food prices pose a serious challenge
to stable worldwide economic growth. At their meeting in Japan, the
leaders also called for an increase in oil production and refining
capacity to help stem soaring prices.
Oil prices rose in Asian
trading on Tuesday while leaders of the world's rich industrial nations
warned of the dangers of soaring oil prices and called for an increase
in oil production.
New York's main oil futures contract, light
sweet crude for August delivery, was 91 cents higher at $142.28 a
barrel after slumping $3.92 to close at $141.37 on yesterday at the New
York Mercantile Exchange.
Brent North Sea crude for August was $1.09 higher at $142.96 from a drop of $2.55 to $141.87 a barrel Yesterday in London.
However
the oil prices tumbled nearly $4 a barrel on yesterday, as concerns
about supply disruptions eased. Light, sweet crude for August delivery
fell nearly 2.7% to settle at $141.37 on the New York Mercantile
Exchange.
In the regional stock markets, the Hang Seng Index
skidded 3.2% to 21,220.81 and the Hang Seng China Enterprises index
tumbled 3.6% to 11,293.32, giving up gains from the previous session.
China's
benchmark Shanghai Composite has lost nearly 47% of its value so far in
2008. After surging 4.6% on yesterday, the Shanghai Composite recently
rose 0.8% to 2,814.95, but was off the day's high at 2,843.43.
The
Nikkei 225 Average lost 2.5% to 13,033.10, giving up more than the 0.9%
it added during the previous session to snap out of a 12-session losing
streak -- its longest in 54 years. The broader Topix index fell 2.2% to
1,283.51.
A series of economic data released today, the Bank of
Japan said that Japan's M2 gauge for money supply increased by 2.3% in
June, faster than May's 2.1% growth and 2.0% growth expected by
economists. M3, which combines M2 with CDs, time deposits, fixed
savings and foreign currency deposits at all financial institutions
including Japan Post Bank, rose 0.9% in June, after increasing 0.7% in
May.
Meanwhile, lending by Japanese banks, excluding Shinkin
banks, rose by 2.0% in June from a year earlier to 393.005 trillion
yen, following a 1.6% gain in May. Bank lending has risen for 29 months
in a row.
Additionally, Japan's economy watchers' index, which
measures workers' perception of economic trends, declined for the third
straight month in June. The major index for current conditions fell to
29.5 last month, lowest reading since October 2001 when the index hit
27.2, from 32.1 in May. According to the survey, higher prices of oil
and raw materials prompted companies to hold off new hiring. The
forward-looking index, which measures expectations about economic
conditions in subsequent months, dipped to 32.1 in June from 35.1 in
May.
Australia's S&P/ASX 200 slipped 1.4% to 4,932.90,
giving up early gains. On the economic front, a monthly survey released
by National Australia Bank showed that Australian business confidence
fell to the lowest level in seven years in June, with the index falling
to -9 points from -4 points in the previous month.
The New
Zealand stock market closed higher, despite a disappointing quarterly
survey of business opinion that pointed at a fall in gross domestic
product over the next two quarters. New Zealand Institute of Economic
Research or NZIER's quarterly survey of business opinion indicated that
New Zealand's business confidence, though negative, was steady at a 33
year low as the outlook of individual firms deteriorated in the second
quarter, suggesting a recession in the economy.
The data showed
that a net 64% of the country's businesses, or 54% on a seasonally
adjusted basis, felt that the general business conditions would worsen
in the coming six months. The figure compares with a net balance of 56%
of firms expecting a deteriorating business situation in the March
survey.
On a seasonally adjusted basis, the survey showed that a
net 18% of firms reported a decline in their own activity and a net 18%
expect their trading activity to fall in the next three months. The
benchmark NZX50 index closed up 1.3% at 3,160.59 reversing yesterday?s
1.2% decline.
The South Korean market slumped as investors sold
banking and other blue chip stocks on interest rate hike fears. The
Bank of Korea is scheduled to hold its monthly meeting on Thursday to
decide the monetary policy. The benchmark Kospi index tumbled 2.9% to
close the session at 1,533.47.
Elsewhere in the region, Taiwan's
weighted index fell 3.9% to 7,051.85 while Singapore's Straits Times
index fell 1.6% to 2,886.62. The Indonesian Jakarta Composite Index is
plunged by 1.1% to 2,278.97.
After opening on a weak note, the
Indian market is declining sharply pressured by weakness in the rest of
the global markets. After opening down 233 points, the BSE Sensex is
currently trading near the day's low at 13,049.96, down 476 points. The
market pared losses in early afternoon trade soon after reports
filtered in that Left parties have decided to withdraw support to the
Congress-led United Progressive Alliance government over the Indo-US
nuclear deal. The S&P CNX Nifty fell below 4,000 mark. At 12:27
IST, the 30-share BSE Sensex was down 312.69 points or 2.31% at
13,213.30. At the day?s low of 13,049.96 Sensex lost 476.03 points in
mid-morning trade. The broader based S&P CNX Nifty was down 74.15
points or 1.84% at 3,955.85.
In Asian currency trading, the U.S. dollar bought 107.07 yen, compared with 107.58 yen late yesterday.
On
Wall Street, the Dow Jones Industrial Average lost 56.58 points to
11,231.96 and the Nasdaq Composite gave up 2.06 points to 2,243.32,
while the S&P 500 index dropped 10.59 points to 1,252.31.
Stocks
in Europe fell sharply in a broad-based decline as investors worried
over financial-sector health and about how a slowing global economy
will impact demand and feed through into corporate profits
Of
national indexes, the U.K. FTSE 100 index fell 2.3% to 5,387.40, the
German DAX 30 index dropped 2.2% to 6,253.60 and the French CAC-40
index slumped 2.3% to 4,243.23.
On the economic front, the
British Chambers of Commerce warned about UK Economy, which is in
serious risk of entering technical recession by the end of the summer
as both manufacturers and services companies see their business shrink.
In
its Quarterly Economic Survey, the British Chambers of Commerce said
the UK business sector is now only a quarter away from technical
recession with homes sales and orders in both the industrial and
services sectors falling outright during the second quarter.
More
specifically, cash flow is negative and at record lows, proving that
tight credit conditions are materially hurting business, and that
confidence in the economy has slumped across the board, as have
employment expectations.
At the same time, intentions to raise
prices remain high among manufacturers, due to elevated costs of raw
materials and rising inflation.
The BCC said the downturn is
particularly noticeable in the services sector, which makes up for the
bulk of the UK economy, and that it now believes the downturn in the
economy will be longer and worse than anticipated so far.
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/
Life Insurance - http://insurance.investorline.co.in/
Investor Journal - http://research.investorline.co.in/
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