Stocks up in Asia but sentiments still jittery

Dow futures ease sharply; Gold hits fresh highs as risk aversion comes back in play

Stocks were mostly up in Asia but the gains were limited as the traders were not willing to factor in a sustained improvement in the world economic conditions amid the chronic debt crisis in the European nations. The markets managed to eke out small gains but the buyers lacked a convincing spirit and their concerns were seen to be turning correct as the DOW futures dropped from around 90+ in the Sidney trades to slid into negative zone. The US dollar also came off the lows to quote around 1.1920, pressurizing the broad commodity prices and resource linked stocks in turn.



The DOW dipped sharply yet again in the last session but the investors in Asia drew comfort from the fact that the US Federal Reserve Chairman Ben Bernanke said the U.S. economy was unlikely to slip back into a recession. Bernanke noted he didn't think that the U.S. economy would slip back in to recession, saying that consumer spending and business investment seem strong enough to keep the economy growing, though at a relatively subdued rate, according to the media reports.

Japanese stocks were mixed with the benchmark Nikkei managing to end in positive territory while the broader Topix index ended with marginal losses. The weakening of the yen against the US dollar lifted exporters, while lingering concerns about Europe weighed on the market sentiment. The benchmark Nikkei 225 Index rose 17.14 points, or 0.18%, to 9,538, while the broader Topix index of all First Section issues was down 0.88 point, or 0.10%, to 858.

On the economic front, a report released by the Ministry of Finance in Japan revealed that the country's current account surplus increased in April from the previous year mainly due to a larger surplus in the trade gap. As per the report, the current account surplus surged 88% year-on-year to JPY 1.24 trillion from JPY 660.6 billion in the previous year.A trade surplus of JPY 859.1 billion was recorded in April compared to the JPY 167.1 billion surplus a year ago. This was driven by growth in exports outpacing that of imports. Exports surged 42.7% annually to JPY 5.58 trillion, while imports grew 26.1% to JPY 4.72 trillion.

Further, the Cabinet Office announced that the country's leading index dropped for the first time since February 2009 in April. As per the report, the index fell to 101.7 in April from 101.9 in March. The expected reading for April was 102.5. The coincident index, at the same time, rose to 101.6 in April. The lagging index dipped to 82.6 from 84.8 in March.

The Australian stocks managed to gains slightly as bargain hunting at lower levels proved an instrumental factor. Mining and banking stocks were the major gainers during the day with gold miners having a very good time on the upbeat undertone in the prices which surpassed all time highs of $1250 an ounce. The benchmark S&P/ASX200 Index rose 55.30 points, or 1.28% to close at 4,381, while the All-Ordinaries Index ended at 4,401, representing a gain of 50.50 points, or 1.16%.

On the economic front, a statement released by the National Australia Bank revealed that business confidence index in the country unexpectedly slumped 8 points in May to a reading of 5. The fall means the sentiment indicator has fallen below its long-term average of 7.

In China, the markets ended a marginal 0.1% up though the sentiments were seen reversing in the later half of the day. The Shanghai Composite Index ended at 2,513.9 points. The Shanghai benchmark has been one of the world's worst performing indexes, down 23 % since the start of this year.

Indian markets failed to hold onto the intraday highs though and levels near 17000 mark proved very difficult to sustain for the benchmark BSESENSEX. Metals and reality stocks endured steep falls and the SENSEX dropped 163.97 points or 0.98% to close at 16617.10. According to World Bank's South Asia Economic Update, India's economy will grow at 8-9 per cent over the next two years. Inflation, rising interest rates, small appreciation in the rupee and continued low growth in high-income countries, however, could weigh on the recovery. The report further states that the Indian economy is recovering faster than expected and is consistently getting broader based. However, this also means that the central bank would not deter to curb the asset prices by tightening monetary policy further, making a sector of market participants nervous at the elevated levels.

In other markets, Hong Kong's Hang Seng Index gained 0.6%, South Korea's Kospi rose 0.8% and Taiwan's Taiex slipped 0.1%.

In commodities, Crude advanced in the early moves but failed to hold above $72 per barrel before succumbing to hefty selling pressure. The commodity was last seen quoting at $70.87, down 57 cents from the previous close. DOW futures have slipped in red, quoting down 7 points. Gold struck fresh all time highs above $1250 per ounce, benefiting from the stress in the financial markets.