Commodities Push Asia Mostly Lower

Ivaylo
12 Sep, 2006
New York City

Asian shares closed mostly lower on Tuesday as a plunge in commodity prices pushed lower oil and mining shares like PetroChina and BHP Billiton, while Japanese industrials including Komatsu cannot still convalesce from weak machinery-order data. Japanese markets turned lower in the afternoon on data showing that consumer confidence declined in August. Only the benchmark index Hang Seng in Hong Kong and Shanghai Composite Index closed higher.

[R]7:30AM Asian stocks closed lower due to plummeting commdity stocks.[/R]
Asian markets ended mostly lower. The Nikkei 225 Average ended the day 0.48% lower at 15719.34. Commodity and materials-linked companies, from steel makers and non-nonferrous metal producers to trading houses, helped to pull down the Nikkei for a second straight session. Nippon Steel shed 1.6%, JFE Holdings skidded 3.8% and Sumitomo Metal Industries declined 2.9%.

The Kospi Index in South Korea sank 0.45% to close at 1328.04. Stocks were also led lower by metal and brokerage shares. Korea Zinc dipped 9.9% after zinc prices hit a three and a half week low on the London Metal Exchange. Posco shed 1.7% on falling steel prices in China, Europe and the U.S. Samsung Securities lost 1.3% and Daishin Securities fell 3.2%.

Taipei fell 1.02% to 6625.73. Stocks in Taiwan ended lower on worries protests against President Chen Shui-bian may develop into an islandwide strike. Local news media reported Monday and Tuesday the organizers of the protests may try to organize a strike to force the president to resign. Memory-chip makers fell, partly on profit-taking. Nanya Technology fell 1.9%, and Powerchip dropped 1.6%.

Australia''s S&P/ASX 200 fell 1.03% to finish at 4974.40. Dropping commodity prices drove the stock market sharply lower, marking the fifth straight day of weakness. BHP Billiton ended 5.7% lower and Rio Tinto fell 5.2% after metal prices declined Monday.

Hong Kong shares ended higher, supported by an upbeat land sale. The Hang Seng Index gained 0.75% to 17075.40. Property developers continued to gain in afternoon trading. Cheung Kong rose 1.3% and Sun Hung Kai Properties advanced 0.5%. Department store operator Parkson Group climbed 4.9% to a record close after China said retail sales moved up 13.8% in August.

China shares also ended higher, supported by draft rules that simplify the procedure for pricing initial public offerings, and by gains in most refiners and airlines following a decline in the price of crude oil. The benchmark Shanghai Composite Index closed 1.3% higher at 1695.86.

[R]6:30AM European shares rebound led by tech and auto stocks.[/R]
European stocks were higher by mid-morning on Tuesday. The FTSE 100 in London was flat at 5,851.3, the Xetra Dax in Frankfurt rose 0.2% to 5,807.27 and the Paris CAC-40 gained 0.2% to 5,070.66. Telecom Italia announced it would be splitting out two businesses, its network and mobile arms, and hinted that it could move on to sell them both. Telecom Italia was flat. Gaz de France beat expectations with first-half net profit adding 1.6%.

Chipmakers were strong with Infineon up 3.1% and STMicroelectronics advancing 2.45, following a rise by peers in the US on optimism demand growth will be sustained. Electrolux, lead the gainers, climbing 5.7%. Lufthansa, German airline, agreed to pay $85m to settle US class-action lawsuits relating to alleged cargo price-fixing. The company received conditional immunity from antitrust investigators. The stock was down 0.6%.

Oil prices advanced above $66 a barrel in Tuesday on a technical rebound after dropping in the previous session on news that OPEC that it would maintain its 28 million barrel-a-day production target. Light, sweet crude for October delivery gained 59 cents to $66.20 a barrel in electronic trading on the NYME. October Brent on London ICE exchanged hands at $64.92 a barrel, up 37 cents.

The euro rose against the U.S.dollar. .In morning trading the euro bought $1.2713, up from $1.2701 late Monday in New York. The British pound climbed to $1.8681 from $1.8645 the day before, while the dollar rose to purchase 117.63 Japanese yen from 117.51. Gold advanced for the first day in five as the U.S. dollar weakened, boosting the appeal of the precious metal, and after an earlier decline attracted buyers. Gold for immediate delivery in London advanced $6.90, or 1.2%, to $596.65 an ounce at 10:05 a.m.

[R]5:00AM Precious metal fell back Monday as funds liquidated long positions.[/R]
December gold plunged $20 at $597.30 a troy ounce on the NYME. December silver lost $1.055 to $11.24 an ounce. October platinum declined $28.90 to $1,200.60 an ounce, while December palladium shed $17.55 to $316.05 an ounce. Most-active December copper sank 15.05 cents at $3.4175 per pound.

The front-month October crude oil contract ended down 71 cents at $65.54 a barrel, its lowest close since March 28. October unleaded gasoline lost 1.45 cents to $1.5946 a gallon. October heating oil finished down 3.78 cents at $1.8054 a gallon and October natural gas shed 0.5 cents to close at $5.670 per million British thermal units.

On the New York Board of Trade, Arabica coffee futures for December was off 2.40 cents to close at $1.0375 a pound. Futures on raw sugar in foreign ports for October settled down 0.48 cent at 11.41 cents a pound.