Asian Markets Follows Wall Street Losses

Hong Kong, Shanghai shows retreat While Kospi Register Some Gains

The stock markets across the Asian region closed mostly lower on worries about the effectiveness of the U.S. government's $700 billion bailout plan for failing financial firms. Investors also turned cautious ahead of the U.S. Treasury Secretary Henry Paulson's testimony to the Senate Banking Committee. The Dow closed down 3.3% at 11,015.69, the Nasdaq closed down 4.2% at 2,178.98 and the S&P 500 closed down 3.8% at 1,207.09.

Crude oil futures for November settlement fell more than $2 in the Asian session Tuesday after the contract surged nearly $7 to settle at $109.37 a barrel. Crude-oil futures leaped more than $16 a barrel yesterday to score their biggest one-day gain in dollar terms since 1984 -- when crude began trading on the New York Mercantile Exchange. Crude futures rallied yesterday to a high of $130 a barrel -- their highest intraday level in two months -- buoyed by a steep drop in the U.S. dollar and speculation that the Bush administration's proposal to stabilize the financial sector might help revive economic growth.

Trading was halted for five minutes after the October crude contract reached the daily price-movement limit of $10 per barrel. Under trading rules, the price-change limit is increased by another $10. Crude for October delivery rose $16.37, or 15.7%, to close at $120.92 a barrel on the New York Mercantile Exchange. The gain surpassed the previous price-gain record of $10.75, registered on June 6 of this year. According to Fact Set this is the highest percentage rise in a single day was seen on Jan. 3, 1994, at 20.9%.

On the currency front, the Australian dollar held firm against a broadly weak U.S. dollar, supported by a rebound in commodities. However, the Aussie trimmed gains as a fresh bout of risk aversion swept financial markets. In late trade, the Aussie eased to US$0.8414 from a session high of US$0.8470. The Aussie closed Monday's local session at US$0.8328-0.8331

The New Zealand dollar steadied slightly below three-week highs on Tuesday. The kiwi finished the session at US$0.6892-0.6902 compared to Monday's local close of US$0.6861-0.6871.

The South Korean won fell against the U.S. dollar. The local unit finished the session at 1,149.0 a dollar, down from Monday's close of 1,140.3 a dollar.

Coming back in Asian equity markets, the financial markets in Japan remained closed on account of Autumn Equinox holiday.

The Chinese stock market closed lower, on profit taking, after the key index surged more than 17% over the previous two sessions. Property developers and liquor producers led the losers. However, index heavyweight PetroChina posted sharp gains on news that its parent company bought 60 million shares, equivalent to a 0.03% stake. The benchmark Shanghai Composite Index closed down 1.56% at 2,201.51.

The Hong Kong market closed sharply lower on profit taking following steep gains in the previous two sessions. The benchmark Hang Seng index closed down 3.87% at 18,872.85.

The Australian stock market closed sharply lower, following two days of gains that saw the index climb almost 10%. The benchmark S&P/ASX 200 index closed down 1.9% at 4,923.5 and the broader All Ordinaries index lost 1.8% at 4,957.7.

The New Zealand stock market closed lower after posting 3% gains over the previous two trading sessions. The benchmark NZX 50 index closed down 0.85% at 3,228.19 and the broader NZX All Capital index lost 0.79% to finish at 3,241.37.

The South Korean market closed higher, recovering from a weak start following Wall Street's plunge overnight. Investors bought machinery, finance and other blue-chip stocks, despite weakness among regional markets and the biggest one-day jump in crude oil prices on Monday. The benchmark Korea Composite Stock Price Index, or KOSPI, rose 1.44% to finish at 1,481.37, extending gains for the third consecutive trading session.

In India, weak global markets and high crude oil prices spooked domestic markets as benchmark index plunged by about 3% as doubts grew about the success of the US government $700 billion bailout package to shore up the economy.

As per provisional closing, the BSE 30-share Sensex was down 424.65 points or 3.03% to 13,570.31. The index shed 451.49 points at the day's low of 13,543.47, hit in fag end of the session. The Sensex fell 16.7 points at day’s high of 13,978.26, hit in mid-morning. The S&P CNX Nifty was down 95.80 points or 2.27% to 4127.25.

Elsewhere, Taiwan's Taiex closed up 1.2% at 6,182; Singapore's STI closed down 2.7% at 2,476; Malaysia's KLCI closed down 0.2% at 1,026; Indonesia's Jakarta Composite index closed down 1.3% at 1,873. Japanese markets were closed for a holiday.

In the other part of the world, European shares declined, with consumer discretionary stocks and banks under pressure as oil futures hovered around $107 a barrel and investors continued to fret about the U.S. government's plans to stabilize the financial sector and the health of the European economy.

On a national level in Europe, the U.K. FTSE 100 index fell 2% to 5,13154, the German DAX 30 index declined 0.6% to 6,071.88 and the French CAC-40 index fell 1.4% to 4,165.21. At 10.37 GMT continued to gain further as U.K. FTSE 100 index plunged further by 2.24% to 5,118.78. The German DAX 30 index decreased by 0.73% to 6,062.94, while the French CAC-40 index was down by 1.6% to 4,156.10.

Looking ahead for the day, all eyes will be on Federal Reserve Chairman Ben Bernanke when he testifies before the Senate Banking Committee regarding the U.S. financial markets. It will be accompanied by housing price index for the month of July and Richmond Fed manufacturing index for the month of September. In the evening ABC/ Washington Post will release its weekly consumer confidence report for the week ended on 21 September 2008.