Asian Markets recoil on Wall Street rally

25 Feb 2009 | 17:08 Asian Markets recoil on Wall Street rally
Stock markets in the Asian region closed mostly higher on Wednesday, 25 February 2009,following triple-digit gains on Wall Street overnight. Reassuring comments from FederalReserve Chairman Ben Bernanke on bank nationalization plans eased investor worries, butgains were modest as caution prevailed amid wider uncertainty over effective policyresponses to the financial crisis.

On Wall Street, the stocks made a sudden comeback with a couple of strong earning reportsfrom retailers and news percolating that Microsoft might still be interested in a dealwith Yahoo gave US stocks a much needed strong boost today. Fed chairman Bernanketestimony before the Senate suggesting recovery in 2010 supported the gains.

The Dow Jones Industrial Average ended higher by 236 points at 7,350, the Nasdaq closedhigher by 54 points at 1,441 and the S&P 500 closed higher by 30 points at 773. Marketstarted the day on a strong note and with time gains just accelerated.

In the commodity market, crude oil was little changed after gaining for the first time inthree days as the U.S. stock market advanced, raising expectations that fuel use in theworld's biggest energy-consuming country may recover.

Crude oil for April delivery was at trading higher by 65 cents or 1.63% at $40.61 abarrel, at 10:54 a.m. London time on the New York Mercantile Exchange. Yesterday, futuresrose $1.52 to settle at $39.96 a barrel.

Brent crude oil for April settlement was up by 53 cents, or 1.25%, to $43.03 a barrel onLondon's ICE Futures Europe exchange at 11:14 a.m. London time. The contractincreased $1.51, or 3.7%, to $42.50 a barrel yesterday.

Gold dropped sharply on Tuesday as traders deemed the precious metal overbought after arecent rally. With the drop, gold retreated away from the $1,000 an ounce mark.April-stamped gold futures ended at 969.10 per ounce, down $25.50 for the session. Priceshit as low as $960.20 in morning trading, after earlier reaching as high as $997. Today,the spot gold was trading at $US958.90 an ounce in Asian trade, down 1.09% from New York'snotional close on Tuesday.

In the currency market, the Japanese yen was quoted at 96.755 against the US dollar. TheUSD/JPY rose to a 3-month high due to Japan's deteriorating economic and politicaloutlooks.

The Hong Kong dollar was trading at HK$ 7.7532 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 Sydney trades, the Australian dollar strengthened in today's trading, closing theday at 65.13 US cents, from yesterday's local close of 64.56 US cents.

In Wellington trades, the New Zealand dollar ended the day at US51.41c from US50.75c ofTuesday.

The South Korean won closed the trading at 1,516 won to U.S. dollar on Wednesday, up by0.30 won from Tuesday's close of 1,516.30 won. The won plunged to a near eleven-monthclosing low against the U.S. dollar on Tuesday

The U.S. dollar was higher against the New Taiwan dollar in early trading in TaipeiTuesday. The greenback was trading at NT$34.731 at 3:45 p.m. on the Taipei ForeignExchange, up NT$0.066 from Tuesday's NT$34.797.

Coming back in equities, in Japan, stocks rose after declining for three days in a row.Japanese Nikkei 225 Stock Average index advanced 192.66 points, or 2.65%, to 7,461.22,while the broader Topix gained 15.34 points, or 2.10%, to 745.62.

On the economic front, Japan registered the largest trade deficit on record in January asthe global recession slowed exports. The nation's trade deficit totaled 952.6 billion yeni.e. 9.97 billion dollars in January. The trade balance showed a deficit for four monthsin a row, and the largest since the government began taking the data in January 1979.Exports fell 45.7% to 3.48 trillion yen from the previous year, and imports dropped 31.7%to 4.44 trillion yen.

In Mainland China, Shanghai stocks got back into positive terrain as steady improving riskappetite became instrumental in making the market pare its early losses. The ShanghaiComposite Index rebounded from a low of 2142.60 and closed at 2206.57, up 5.92 points or0.27% form the previous close. The Shenzhen Component Index on the smaller Shenzhen StockExchange decreased 1.92% or 161.35 points to 8,241.66 points, after touching an intradaylow of 7,994.59 points.

In Hong Kong, stock market regained the 13,000-level, as investors were encouraged by thestrong performance of Wall Street overnight accompanied by good regional rebound. The HangSeng Index continued ended sharply higher 206.56 points, or 1.61%, to 13,005.08, while theHang Seng China Enterprise Index, which tracks H shares of Chinese companies, added by115.51 points, or 1.63% to 7,183.72.

On the economic front, Hong Kong's economy contracted by 2.5% on year in the fourthquarter of 2008, the government said on Wednesday, sharper than analyst expectations thathad called for a 1.5% annual decline.

For all of 2008, gross domestic product was up 2.5% compared to the previous year, thedata showed. Exports were up 2.0% on year, while inflation added an annual 4.3%.Expectations for 2009 call for GDP to contract between 2.0% and 3.0% on year, which wouldrepresent the first full-year decline since 1998. The government also expects inflation torise 1.6% on year.

Hong Kong financial secretary John Tsang Wednesday proposed a one-time reduction of 50% onsalary taxation, subject to a ceiling of HK$6,000 ($769), as expected. The reduction isestimated to cost the government HK$4.1 billion and affect all of the city's 1.4 milliontaxpayers. The government also extended an existing freeze on government fees and chargesuntil March 31, 2010

In Australia, markets wiped out the early hours gains, as the benchmark index decided tobuck the regional rebound, registering their lowest levels in five years. Materials andresource sector led the main indices to their lowest level since February 2004 while someof the media stocks supported them on the back of worse earning report

Bucking the regional rebound, the benchmark S&P/ASX200 ended the day marginally lowerby 4.1 points, or 0.10%, to 3,327.50, while the broader All Ordinaries decreased 3.50points, or 0.10%, to 3,281.

On the economic front, skilled job vacancies slumped a further 11% in February. Accordingto the data released by the Department of Education, Employment and Workplace Relations(DEEWR) skilled vacancies index in February was 46.4 points, 52.4% lower than in February2008. Vacancies fell in all three occupational groups monitored by the department. Tradevacancies declined 12.4%, associate professionals fell 7.5% and professionals dropped6.3%.

In New Zealand, the benchmark index reversed its trend to move forward after registeringseven consecutive declines. Equities on the New Zealand stock market ended in the positiveterritory, after plunging by 2% yesterday. The benchmark NZX50 advanced 0.49% or 12.292points to close at 2499.82. The NZX 15 increased 1.08% or 50.153 points to 4682.024.

In South Korea, stock market ended marginally higher, as losses by construction issues ondeepening economic worries cut the earlier gains put by KT Corporation after it announceda share buyback plan. The Korea Composite Stock Price Index increased by 3.2 points or0.3% closing the day at 1,067.08.

On the economic front, South Korea's financial watchdog, the Financial ServicesCommission, said today that the government would initially inject 12 trillion won, orUS$7.98 billion, into local banks in March to bolster their capital and encouragerisk-averse lenders to expand. The money will come from a bank recapitalization fund to beused to buy subordinated bonds and hybrid debt from lenders. The fund will ultimately beexpanded to 20 trillion won.

In Taiwan, stock market swiped its yesterday's one-month low status to one-week high todayas the government stepped up efforts to save the beleaguered DRAM industry by joininghands with Japan to set up a new DRAM company in Taiwan. The main Taiex share index endedhigher by 63.56 points or 1.43% at 4,493.74, the strongest close since 19 February 2009.

On the economic front, Taiwan's export orders and industrial output posted record falls inJanuary in a further blow to the recession-hit Taiwan as the global slowdown evaporateddemand for electronics.

According to the data released by the ministry of economic affairs, export orders plungedby 41.67% to US$17.68 billion in January 2009- the biggest fall since 1984 when thegovernment started compiling figures. If counted in New Taiwan dollars, export ordersamounted to NT$58.71 billion in January 2009, down by 40.15% over the same month of lastyear.

Industrial output posted an annual decrease of 43.11% in January 2009. Industries weremanufacturing 44.71%, mining & quarrying 31.67%, electricity & gas supply 16.3%,water supply 6.21%, and buildings construction 21.51%.

In Philippines, markets reversed their two days losses, closing nearly 1% higher, asinvestor's sentiments were supported by gains on the Wall Street overnight, which inturn led to the buying of key heavyweight stocks. The benchmark index augmented 0.93% or17.51 points to 1,887.10, while the All Share index rose 0.61% or 7.42 points to 1,223.70.

On the economic front, Finance Secretary Margarito B. Teves raised the deficit cap for2009 to P177.2 billion from P102.billion, equivalent to around 2.2% of GDP, on the need tohike spending on infrastructure and services.

In India, the key benchmark indices cut gains in late trade as banking stocks and indexheavyweights pared gains. However, auto and IT stocks held firm. As per the provisionalfigures, the BSE 30-share Sensex was up 80.50 points, or 0.91%, to 8,902.56. The barometerindex came within a striking distance of the psychological 9,000 level. The S&P CNXNifty was up 28.60 points, or 1.05%, to 2,762.50 as per the provisional figures.

Elsewhere, Malaysia's Kula Lumpur Composite index was up 0.27% or 2.44 points to 896.51,while Indonesia's Jakarta composite increased by 4.24 points or 0.33% to 1,300.11. InThailand, the Thai Stock exchange added 2.92 points or 0.68% to 434.24.

In other regional market, European shares advanced in early trading on Wednesday, asnationalization fears faded in the banking sector and investors eyed a slew of earningsreports. Of national markets in Europe, the German DAX 30 index rose 1.3% to 3,947.63, theFrench CAC-40 index climbed 1.5% to 2,747.85 and the U.K. FTSE 100 index advanced 0.9% to3,849.76.