Extended gains for Asian stocks

Except China and India, most major indices clock decent gains

Asian markets mostly ended up on steady overnight cues from the US market and strong commodity prices. The economic data was generally strong and most of the major indices, bearing India and China ended in green. The US stocks scored modest gains yesterday. The Dow edged up 13.32 points or 0.1 percent to 11,372.48, the Nasdaq advanced by 10.67 points or 0.4 percent to 2,609.16 - a new nearly three-year closing high, while the S&P 500 ended the day at its best closing level in well over two years. There was nothing much on the US economic calendar last night and Asian markets witnessed a robust start amid strong commodity prices and a weak US dollar. The sentiments in commodities remained generally stronger though as copper soared to fresh highs and crude also stayed around $89 per barrel.



Risky assets have had a good time in last two days as US President Barack Obama has agreed in principle to a framework to extend the previous administration's tax cuts for two years, as part of a deal that will include a 2 percent payroll tax deduction and an extension of jobless benefits.

Data out yesterday showed that the industrial production in Germany, Europe's biggest economy, increased strongly in October. The Economy Ministry said Wednesday production rose 2.9% compared with the previous month. A latest survey showed business sentiment at Asia's leading companies rebounded in the fourth quarter ending December 2010. The Reuters Asia Corporate Sentiment Index rose to 77 in the quarter from 69 in the third quarter, the second highest reading since Reuters began collecting data in June 2009.

The Japanese market gained for a second successive day after the Cabinet Office revised the third quarter GDP numbers upwards. Japanese Yen also eased slightly and exporters led the broad markets up. The benchmark Nikkei 225 Index added 53.55 points, or 0.5%, to close at 10,286 after testing a seven-month high during intraday moves. On the economic front, a final report released by the Cabinet Office stated that the country's gross domestic product, or GDP expanded 1.1% in the third quarter of 2010 compared to the previous three months. Growth was at an annualized 4.5% rate in the three months ended Sept. 30 compared with 3.9% reported last month. In nominal terms, the economy grew 2.6%, as price deflation accelerated. Further, the Japan Machine Tool Builders Association stated that machine tool orders increased 104.2% year-on-year in November, following a 71% increase in the previous month.

The Australian stocks had a good outing as well as strong commodity prices turned supportive. Banks and mining stocks led the gains in the market after a sell off in the last session. Stocks dipped yesterday, led by banks as the Reserve Bank Of Australia Governor Wayne Swan pledged to release competition policy next week. Stocks surged today with an early break above 4700 points pushing up the benchmark S&P/ASX200 Index by 41.40 points, or 0.88% to close at 4,741 points. The economic data was also quite good. The Statistics Bureau of Australia stated that the unemployment rate unexpectedly declined by 0.2% to 5.2% with 54,600 new jobs created during the month. The report further noted that the employment participation rate increased a seasonally adjusted 0.1% to a record high of 66.1%, and the number of people seeking unemployment benefits decreased by 3.0% to 627,800.

In China, stocks extended the last session's drop and ended lower with mounting worries about further monetary tightening. Banks and resources slipped today and the benchmark Shanghai Composite Index closed down 37.60 points or 1.32% at 2,810.95. Yesterday, the nation's banking regulatory authority asked trust companies nationwide to examine loans to property developers to control credit risks.

In Mumbai, the key benchmark indices tumbled more than 2% in a broad based sell-off, underperforming mostly higher global stocks, as data showing heavy selling by foreign funds on Wednesday, 8 December 2010, dampened sentiments. The market extended last two days' losses. Index heavyweight Reliance Industries (RIL) slumped more than 3%. Investors dumped small-cap and mid-cap shares as media reports of possible price rigging in select stocks, coming close on the heels of a Sebi action last week against four firms on allegations of price manipulation, rattled investors. As per provisional figures, the BSE 30-share Sensex was down 435.81 points or 2.21% to 19,260.67. The Sensex slumped 535.61 points at the day's low of 19,160.87 in late trade.

In other markets, South Korea's Seoul Composite gained 1.70%, Hong Kong's Hang Seng added 0.34% while Taiwan's Taiex gained 0.58%. Dollar rose in late afternoon trades, currently quoting around 1.3200 against the Euro after dropping to levels above 1.3300 in the morning trades. DOW futures also cut gains to quote up 33 points right now while Light sweet crude oil futures for January delivery came off a high of $89.42 per barrel and currently quote at $88.46, up 18 cents from the previous close.