Wednesday wracks losses from Asian markets

Sensex, Seoul leads winners rally while Hang Seng, Nikkei back with strong gains

Stock market in Asian region shaded their recent woes on Wednesday, 10 June 2009, led by higher metal and oil prices, which rose on expectations of higher demand. Wall Street's resilience even amid uncertainty concerning a recovery and stronger than expected economic data from Australia as well as China lifted market sentiment. Concerns about the negative sentiment generated by weak Japanese machinery orders were more than offset by optimism about global recovery, helping the Asian stocks advance.

On Wall Street, technology stocks advanced on Tuesday, but it wasn't enough to prop up all three major averages as oil climbed to $70 barrel and investors mulled news that some banks have been cleared to repay taxpayer bailout funds. The Dow Jones Industrial Average lost 1.43, or 0.02%, to 8763.06, while the S&P 500 rose 3.29 points, or 0.4%, to 942.43. The Nasdaq Composite added 17.73 points, or 1%, to 1860.13. The Dow churned all day, crossing back and forth across the flat line 81 times.

In the commodity market, crude oil rose to a seven-month high after an industry group reported U.S. stockpiles dropped and the dollar declined, bolstering the appeal of energy as an alternative investment.

Crude climbed past $71 a barrel as the American Petroleum Institute said oil supplies fell 5.96 million barrels to 357.9 million last week, the lowest level since March. The Department of Energy will report their data later today. Support for crude prices came on expectations the dollar may extend its decline against the euro on speculation the global recession is ending.

Crude oil for July delivery rose as much as $1.17, or 1.7 percent, to $71.18 a barrel in after-hours trading on the New York Mercantile Exchange. It was at $71.15 a barrel at 2:39 p.m. Singapore time. Yesterday, the contract increased $1.92 to $70.01 a barrel, the highest settlement since 4 November 2008.

Brent crude for July delivery rose as much as $1.01, or 1.5 percent, to $70.63 a barrel on London’s ICE Futures Europe exchange, the highest since Oct. 22. It was at $70.50 at 2:46 p.m. Singapore time. The contract rose yesterday $1.74, or 2.6 percent, to end the session at $69.62 a barrel.

Gold gained for a second day as the dollar weakened and investor concern increased that inflation may accelerate, spurring demand for the precious metal as an alternative investment.

Gold for immediate delivery gained 0.5% to $959.54 an ounce at 1:48 p.m. in Singapore, after rising 0.3% yesterday. The precious metal, which some investors buy to hedge against inflation, last traded at more than $1,000 an ounce on 20 February 2009, and reached a record $1,032.70 on March 17, 2008.

In the currency market, US dollar edges lower on the back on further strength in oil price. Aussie and Kiwi were the strongest gainers, lifted additionally by Australia consumer confidence, which rose to 22 year high of 12.7% in June.

The Japanese yen strengthened against most of its major counterparts on Wednesday. The Japanese currency quoted at 97.41 against greenback.

The Hong Kong dollar was trading at HK$ 7.7513 against the dollar. Actually The Hong Kong dollar is pegged at HK$ 7.8 to the U.S. dollar but can trade between HK$ 7.75 and HK$7.85 to the U.S. dollar.

In Sydney trade, the Australian dollar advanced to multi-day highs against the greenback on Wednesday. The Aussie was quoted at 80.52 cents against the greenback.

The NZ dollar was ended at US63.10c, up from US61.86c yesterday. The currency rose above the US63c figure late in the domestic session, having gained earlier, care of a weak US dollar. The kiwi rose today as attention turned to tomorrow's interest rate decision by the Reserve Bank of New Zealand

The South Korean won ended at 1,246.7 won against the dollar, up 18.3 won from Tuesday's close, boosted by foreign investors' buying of local stocks.

The Taiwan dollar strengthened faster. The Taiwan dollar gained against the US dollar as it was trading higher at NT$ 32.7120, up by NT$ 0.1430 from Tuesday’s close of NT$32.853.

Coming back in equities, Asian markets closed broadly higher, with oil and metals stocks leading the charge as commodity prices extended their rally, supported by wagers on global economic recovery and recent weakness in the U.S. dollar.

In Japan, the stock index surged, as investors bought shares battered in the previous trading day on recovered optimism over the economy and firmer commodity and oil prices. Resource-related stocks led the market after rebound in metal and oil prices. Shares of marine transport rebounded from a four-day retreat after brokerages firm upgrade their rating. Exporters surged on improved sentiments for global economy. The Nikkei 225 Stock Average index surged 204.67 points, or 2.1%, to 9,991.49, while the broader Topix index spurted 18.77 points, or 2% to 937.

On the economic front, Japan’s Cabinet Office said Japan’s core machinery orders were down 5.4% on month in April to 688.8 billion yen for to a 22-year low, following the 1.3% decline in March and the 0.6% gain in February. On an annual basis, core machinery orders plummeted 32.8% after the 22.2 contraction in the previous month.

In a separate statement, the Bank of Japan said that the price of domestic corporate goods in Japan eased 0.4% in May compared to the previous month, falling for the third straight month to an index score of 103.0, following the revised 0.6% decline in April and the 0.2% contraction in March. On an annual basis, corporate goods prices plummeted 5.4% on year, marking the largest annual decline since March 1987.

In Mainland China, stock market surged, with gains in the shares of energy, miners, and resources on bargain hunting as the country’s May CPI and PPI data showed sign of an economic recovery and oil climbed above $71 a barrel in Asian trade and metals prices advanced in LME.

The Shanghai Composite Index, which covers both A shares and B shares on the Shanghai Stock Exchange, leaped 1%, or 28.36 points, to 2,816.24, meanwhile the Shenzhen Component Index added 0.75%, or 80.65 points, to 10,820.74.

On the economic front, the National Bureau of Statistics said in a report that China’s consumer prices fell 1.4% year-on-year in May, following a 1.5% fall in April. On a monthly basis, inflation eased 0.3%.

In other statement, NBS said China’s producer prices fell 7.2% on year in May, from a 6.6% drop in April. On year, the producer prices were lower by 6.9% after the 6.6% annual decline in the previous month.

The National Development and Reform Commission said in a statement that Real estate prices in 70 major Chinese cities dropped 0.6% on average in May from a year earlier.

In Hong Kong, the stock market spurted, snapped two days of losing streak on broad based bottom fishing across the sector on tracking positive lead from mainland and other Asian market and rebound in commodity prices. Shares of in financials, properties, and commerce & industry issues zoomed on improved sentiments on global economic revival. Iron & Steel and nonferrous metals and energy stocks drifted up after commodities and oil prices bounced.

The Hang Seng Index climbed up 727.17 points, or 4.03%, to 18,785.66, while the Hang Seng China Enterprise Index mounted higher by 529.23 points, or 5.04% to 11,033.55.

In Australia, the stock market spurted, with broad based gains across the sector on the back of firmer commodity prices and positive economic data. The materials, energy, and mining sectors were the best performer, thanks to very impressive gains in metal and crude oil prices. The market appeared happy with BHP Billiton’s initial metallurgical coal settlement price of 58% below 2008 prices. At the closing bell, the benchmark S&P/ASX200 index surged 89.5 points, or 2.27%, to 4,024.4, while the broader All Ordinaries spurted 82.7 points, or 2.1%, to 4,016.3.

On the economic front, The Westpac–Melbourne Institute Index of Consumer Sentiment rose 12.7% to 100.1 in June from 88.8 in May. This was second largest amount since the survey began in 1974 and the largest increase in 22 years.

In New Zealand, benchmark index edged forward to end in the positive region although it slipped in the early trading. Most of the Asian markets were trading in the positive region although there was no major lead from Wall Street. However, traders took their cue from the buoyant commodities market with oil and metal stocks leading the way after a surge in commodity prices.

The NZX50 rose 0.20% or 5.56 points to 2827.97. However, the NZX 15 edged down 0.02% or 1.196 points to close at 5170.05.

On the economic front, export prices fell 8.2 percent in the March quarter, the largest quarterly fall since 1957, registering the biggest fall in 50 years, as per the statistical department. The drop was mainly driven by a fall in dairy product prices, which were down 20.5 percent, with another main factor being a 28 percent fall in petroleum and petroleum products due to lower export prices for crude oil. Import prices fell 5.4 percent in the March 2009 quarter, with petroleum and petroleum products down 35.8 percent. The terms of trade fell 3 percent in the quarter as export prices fell more than import prices. The decline is the largest fall in the terms of trade since the June 2002 quarter.

In South Korea, stocks closed 3.14% higher on bargain hunting by institutions and foreign investors. The benchmark Korea Composite Stock Price Index (KOSPI) climbed 43.04 points to 1,414.88.

On the economic front, South Korea's money supply, representing the South Korea’s the broadest measure of money supply, rose 9.3% year-on-year in April, slowing from a 10.6% growth in March. As per the statistics released by the Bank of Korea the money supply growth has now eased for the third consecutive month in April. Meanwhile, the M2 measure of money supply increased 10.6% annually in April compared to an 11.1% rise in the previous month.

In Singapore, the stocks index surged, on tracking positive lead from other Asian market, with investors going in for some bargain hunting after a modest setback in the previous session. Shares of multi-industries, manufacturing surged as rebound in metal and oil prices. Meanwhile construction, financials and properties ballooned on improving sentiments for global economy. The blue chip Straits Times Index added 41.35 points, or 1.76%, to 2,391.22.

In Taiwan, stock market showed some signs of respite from recent turn down, as it ended higher, rebounding from it’s a one-month closing low registered in previous session. The main Taiex share index snapped its losing streak as the Taiex index gained by 47.88 points or 0.75%, closing the day at 6462.27.

In Philippines, the stock market overturned its two days losses; closing nearly 2% higher, despite the desolate export data released by the NSO today. Bargain hunting by investors in the key heavy weight stocks dragged the composite index higher. The benchmark index PSEi escalated 1.70% or 42.46 points to 2,530.72, while the All Shares index rose 1.30% or 20.81 points to 1,619.66

On the economic front, Philippine exports fell for a seventh month in April as the global economic slump slashed electronics demand, with demand from top trading partners like the United States still sluggish. Merchandise export sales fell by 35.2% in April to $2.803 billion from $4.328 billion, year on year. That year-on-year drop was faster than the -30.8% recorded in March. Month-on-month, sales dropped 3.6% from $2.907 billion in March, whose 16% rise -- after seven consecutive months of contraction since August last year -- had encouraged some government officials to say that merchandise exports were on a rebound.

In India, firm global markets and higher US index futures helped Indian stocks register strong gains for the second straight day. Indian stocks today extended their recent strong gains on a view that ample global liquidity and a return of risk appetite will help India Inc help raise funds for expansion, which in turn will boost corporate profits.

The BSE 30-share Sensex was up 339.81 points, or 2.25%, to 15,466.81. The Sensex rose 453.81 points at the day's high of 15,580.81 in mid-afternoon trade, its highest level since 18 June 2008. The S&P CNX Nifty was up 104.30 points, or 2.29%, to 4,655.25.

Elsewhere, Malaysia's Kula Lumpur Composite index was up 1.04% or 11.18 points to 1082.97 while Indonesia’s Jakarta composite index ended the day higher at 2108.81.

In other regional market, European shares jumped with sharp gains from commodity-sector firms on hopes for a strong recovery for China helping stocks stage a broad-based advance. On a regional level, the U.K. FTSE 100 index rose 1.8% to 4,483.31, the German DAX 30 index rose 2% to 5,096.68 and the French CAC-40 index climbed 1.6% to 3,349.77.

Looking ahead, trade balance from UK, US and Canada will be released. Besides, UK Industrial production is expected to drop again Apr with manufacturing production expected show some rise. Canadian new housing price index is expected to drop –further in April. Fed's beige book will also be released.