Asian markets edge up in nervous trade

Overall activity remains calm as the US Fed meet takes centre stage

Asian markets edged up slightly in nervous trade, following the broad retreat in the US stocks on Friday as the non-farm payrolls dropped more than expected, sending across worries that the US economic recovery might be stalling. The overall undertone in the global markets was quite with mild profit selling activities dominating the scene as the investors poised for the Tuesday's meeting of the US Federal Open Market Committee (FOMC) for signs of any monetary policy action to stimulate the economy.



The US Labor Department said Friday that the US economy had lost 131,000 jobs in July and the unemployment rate remained high at 9.5 percent. This drop in the jobs was much more than expected, leading to an immediate sell-off on Wall Street. DOW recovered from intraday lows later on but still closed down, extending its broad retreat from a two and half month highs.

The Fed meet could throw some light as to what the policymakers intend to do in order to turn around the fragile economic conditions and kick up the consumer spending. With autumn mid-term elections approaching, there is intense pressure on the Obama administration to take action.

The Asian markets were off to a subdued start but picked up some gains later on. Japanese stocks dropped on negative Wall Street cues and the strength in the local currency. The Yen quotes around 85 per US dollar mark, its 15 year high. A stronger yen makes Japanese exports less competitive and erodes overseas earnings when the revenues are repatriated. The Nikkei 225 Stock Average dropped 69.63 points, or 0.72%, to close at 9,572.49 while the broader Topix index was down 3.55 points, or 0.41%, at 857.62.

However, the Australian stocks turned up, climbing to their highest level in more than six weeks after an early dip to a five-day low, continuing with the bullish momentum triggered after the central bank held up the interest rates steady in the last week. The benchmark S&P/ASX 200 added up 28.8 points, or 0.6%, to close at 4594.9.

The central bank stated last week that the Australian economy continued to expand at a solid pace over the first half of 2010. The economy is benefiting from elevated commodity prices and high levels of public investment. Employment growth has been strong and confidence remains generally positive. Over the period ahead, some rebalancing of growth is expected, with public investment likely to decline as stimulus projects are completed, while private demand is expected to strengthen. The latest available GDP data show that real GDP increased by 0.5 per cent in the March quarter, to be 2.7 per cent higher over the year.

Chinese markets also climbed with the optimism that the country would produce an impressive set of economic numbers in the current week. The Shanghai Composite Index ended at 2,672.5 points, adding 0.5% as a rebound from levels under 2600 continued. China is set to announce a raft of macroeconomic numbers, including July exports and inflation numbers, in the coming days, with policymakers trying to gauge the extent to which external demand will compensate for slower domestic growth brought on by tightening measures.

In Mumbai, the key benchmark indices remained firm in mid-afternoon trade as European stocks and US index futures rose. Banking, realty and consumer durables stocks were in demand. The market breadth was strong. A further improvement in southwest monsoon rains and sustained buying by foreign funds, underpinned sentiment on the domestic bourses. The BSE 30-share Sensex was up 99.59 points or 0.55%, up close to 105 points from the day's low and off close to 20 points from the day's high.

In other markets, the Hang Seng index in Hong Kong added 0.57% and the TSEC index in Taiwan jumped 0.89%. The Singapore stock market was closed.

Dollar tumbled to 1.3300 yet again as the currency traders remained worried about the US economic conditions. Dow futures were mostly in red in early moves but then recouped the losses to trade in green, currently adding 33 points. Crude oil futures also moved up above $81 as traders continued to look at the faltering US dollar.