Asia Slumps

Ivaylo
28 Mar, 2007
New York City

Asian markets ended sharply lower on Wednesday, swinging from what had been moderate strength with regional markets earlier in the session, as exporters declined on renewed worries over the growth outlook for the U.S. economy. Companies that sell to the U.S. after consumer confidence and home prices declined in the region largest export market. Inpex Holdings Inc. and Cnooc Ltd. led energy producers higher after the oil price rose to a six-month high.

[R]9:00AM Asian markets finished sharply lower on U.S. growth concerns.[/R]
Asian markets ended distinctly lower on Wednesday. Tokyo Nikkei 225 Average gave back earlier gains, falling as much as 1%, ending 0.6% lower at 17,254.73. Toyota, largest automaker in Japan, fell 1.4 %. Sony Corp., the maker of consumer electronics which made 70% of its sales overseas last year, fell 2.1%.

Hon Hai Precision Industry Co., the world largest contract manufacturer, declined 2.3%. Shares of Sapporo Holdings were down 1.7% on reports that shareholders are likely to support measures Thursday that will make it difficult for an outside group to takeover the brewer.

Hong Kong Hang Seng Index was 0.9% lower at 19,525.32. Shares of Hong Kong-listed Hang Lung Properties fell 3.1%. Shares of Hong Kong fixed-line operator PCCW were up 0.9% ahead of the release of its full-year results later Wednesday.

South Korea Kospi Index closed 0.9% lower to 1,439.74, Singapore Straits times Index ended 1.3% down at 3,201.17 and Taiwan Weighted Price Index shed 0.7% to 7,788.14. Australian S&P ASX/200 closed down 0.7% to 5,923.20 and Shanghai Composite Index egded lower 1.1% to end at 3173.01. Both markets had posted gains earlier in the session.

Oil stocks bucked the trend and advanced. Shares of Inpex rose 2% in Tokyo trading, while Nippon Oil, Japan largest oil distributor, rose 0.7%. Also on the advance, Australian Woodside Petroleum was up 0.3% and Chinese Cnooc rose 0.3% in Hong Kong.

[R]8:00AM NY-7:00PM Mumbai Sensex plummets on heavy selling in large-caps.[/R]
The Sensex on BSE finished 239.98 points, or 1.83%, lower at 12,884.34. The session was highly volatile as the market traded within a range of 175 points. The market breadth was weak as there were three decliners for each advancer. As 1,936 stocks declined, 651 advanced and 61 remained unchanged. Of the 30 stocks in the Sensex only eight advanced, while the rest declined. The turnover on BSE was Rs 4,008 crore, higher than Rs 3,209.57 crore on Monday, while on NSE, the turnover was Rs 8,363.28 crore, much higher than Rs 6,753.15 on Monday.

Economic news

Deutsche Bank, biggest bank in Germany, will invest in emerging markets such as India, as it aims to expand consumer banking and money management to help increase pretax profit, excluding nonrecurring gains or costs, to 8.4 billion euros in 2008. The bank opened eight branches in India and began selling credit cards there.

The rupee kept surging against the US dollar and hit a multi-year high of 43.1525/43.1600 a dollar in late morning deals on sustained dollar sales by banks together with strong capital inflows.

Trading highlights

Indiabulls Real Estate was the most-active stock with a turnover of Rs 491.75 crore followed by Infosys and TCS.

Advancers

Pharma stocks were among the few gainers. Ranbaxy Laboratories led the advancers, up 3.% to Rs 338, as 3.32 lakh shares were traded on BSE. Dr Reddy Labs gained 1.8% to Rs 694. BHEL was up 1.2% at Rs 2,280. Reliance Energy advanced 1.8% to Rs 484, and ONGC added 1.5% to Rs 866. Other gainers included ITC, higher 0.6% to Rs 143 and Hindustan Lever, up 0.2% to Rs 198.

Decliners

IT stocks plummeted, as the dollar dipped versus the Rupee to its lowest level since June 1999. Also, a weak consumer confidence report caused concerns about a slowdown in the United States, where these companies generate most of their revenue. TCS slumped 4.8% to Rs 1,201, Satyam Computers shed 3.5% to Rs 456, Infosys lost 3.2% to Rs 1,992 and Wipro declined 4.8% to Rs 558. Of company news, Satyam Computer has signed a five-year contract valued at 200 million dollar with US-based Applied Materials, a global leader in Nanomanufacturing technology for providing application development, maintenance and support services.

Auto large-cap Tata Motors fell heavily, down 4.7% to Rs 719 and Index heavy Reliance Industries declined 1.48% to Rs 1,344.95. Other decliners included HDFC, off 3.5% to Rs 1,519. Larsen & Toubro shed 3% to Rs 1,566. Maruti, Hindalco and Bharti Airtel were down around 2.5% each to Rs 799, Rs 130 and Rs 758, respectively. Maruti lost 2.5% to Rs 798 and Hindalco dipped 2.4% to Rs 130.

Tata Steel lost 0.9% to Rs 438. The private sector steel large-cap has now entered into talks with the second-largest steelmaker in the world, Nippon of Japan for jointly producing an alloy for automakers and other companies.

[R]6:30AM European shares were lower Wednesday on selling pressure.[/R]
European markets declined on Wednesday morning. In early trade, Frankfurt Xetra Dax climbed 0.4 % to 6,829.21, the CAC 40 in Paris added 0.4 % to 5,566.23 and London FTSE 100 slipped 0.1 % to 6,288.5. National benchmarks fell in 16 of the 18 markets in western Europe.

Advancers

Oil groups provided the only substantial support to the market after oil prices spiked briefly above $66 a barrel. Finnish refiner Neste Oil gained 2.3%, France Total rose 1%, while Britain BP added 1% and Royal Dutch Shell, Europe biggest oil company, gained 1.7%.

Decliners

BHP Billiton, the world biggest mining company, dropped 0.8% and Rio Tinto Group slipped 2%. SAP, the world largest maker of business-management software, fell 1.2% and Ericsson AB, the biggest producer of wireless-network equipment, lost 0.8%. Siemens AG, Europe largest engineering company, lost 1.6%.

Airlines were also lower as oil accounts for 30% of airlines costs. Shares of Air France lost 1.3%. British Airways, Europe third-biggest airline, retreated 0.9%. UPM-Kymmene led the Finnish paper and forestry groups lower, down 4.1%, after reports that an early spring in Finland could cause problems accessing raw materials in remote areas.

Oil and gold

Oil gained for a seventh day in New York on concern a dispute over detention of British servicemen by Iran will escalate. Crude oil for May delivery gained as much as $1.53, or 2.4%, to $64.46 a barrel in electronic after-hours trading on the New York Mercantile Exchange. Brent crude for May settlement rose as much as $1.53, or 2.4%, to $66.13 a barrel in electronic trading on the London-based ICE Futures exchange.

Gold advanced to a three-week high as speculation the U.K. may raise diplomatic pressure on Iran over the seizure of its servicemen. Gold for immediate delivery climbed $1.29, or 0.2%, to $665.70 an ounce in early trade in London. Silver climbed 6.5 cents to $13.34 an ounce, after falling 0.8% yesterday. Platinum gained $8.50 to $1,243.50 an ounce and palladium rose $1 to $353.50.

Currencies

The U.S. dollar traded mixed against other major currencies in European trading Wednesday morning. The euro traded at $1.3340, down from $1.3344 Tuesday in New York. The British pound traded at $1.9624, down from $1.9656. The dollar fetched 117.40 Japanese yen, down from 117.95

[R]5:00AM Copper, gold declined Tuesday, while energy stocks gained.[/R]
The most-active May copper declined 8.10 cents to settle at $3.0575 per pound on the New York Mercantile Exchange. April gold shed $1.40 to finish at $662.50 a troy ounce, while May silver lost 13 cents to $13.28 an ounce. June palladium was off $3 to $356 an ounce, but April platinum rose $5.50 to $1,242 an ounce.

The May crude oil contract gained 2 cents to finish at $62.93 a barrel. April RBOB gasoline advanced 0.53 cent to $2.0730 a gallon after hitting a new seven-month, intraday high of $2.0850 a gallon. April heating oil futures ended up 1.03 cent at $1.7864 a gallon and April natural gas futures gained 24.9 cents, or 3.4%, to settle at $7.503 a million British thermal units, the highest close since Feb. 27. Natural gas futures were boosted by a weather forecast of stronger hurricanes this year in the Gulf of Mexico, which could pose a risk to production in the region.

Arabica coffee futures also dropped. May coffee closed 1.9 cent lower at 1.1245 a pound, while July finished 1.9 cent weaker at $1.1525 a pound. Futures on raw sugar in foreign ports settled higher though, with May sugar closing 0.11 cent higher at 10.11 cents a pound, and July sugar finishing 0.12 cent stronger at 10.17 cents a pound.