The stock markets across the Asian region closed on a mix note after Wall Street fell for a second day on inflation worries, continued weakness in the financial sector and a rebound in crude oil prices. On Wall Street, the Dow Industrials lost 1.14%, the broader S&P 500 dropped 0.93% and the tech-heavy Nasdaq fell 1.35%. The Labor Department released its report on wholesale price inflation in the month of July, showing that prices increased by much more than expected due in part to a continued increase in energy prices.
Asian financial stocks were weak, but resources were higher on stronger commodity prices. Oil prices rebounded, jumping back above $114 barrel after the dollar weakened against the euro and heating oil prices rose sharply. Light, sweet crude for September delivery rose by $1.66 to settle at $114.53 on the New York Mercantile Exchange ahead of the expiry of the September contract on Wednesday. In late Asian session Wednesday, oil was up 66 cents at $115.19 a barrel by 4:08 a.m. ET.
On the currency front, the U.S. dollar declined on profit taking following recent rally and weakness in the U.S. stock market. The dollar traded in the upper 109-yen levels in early Tokyo deals, down from lower 110-yen levels late Tuesday. The dollar was quoted at 110.00-110.02 yen compared to yesterday`s close of 110.00-110.03 yen in Tokyo.
However, the Australian dollar closed firmer amid a rebound in commodity prices and a weaker U.S. dollar. The Aussie finished the session at US$0.8716-0.8720, up from Tuesday`s close of US$0.8642-0.8645.
The New Zealand dollar edged closer to two-week highs supported by a weaker U.S. dollar and stronger commodity prices. The kiwi, which has lost 6% over the past month, finished the local session at US$0.7150-0.7160, slightly below the peak of US$0.7162 hit on Monday, compared to US$0.7080-0.7086 late Tuesday. In the early Asian trade the kiwi was quoted higher at US$0.7138 in early local trade.
The South Korean won edged up against the U.S. dollar. The local unit closed at 1,049.30 a dollar; up from 1,051.80 a dollar at open as foreign exchange authorities unloaded some of their dollar holdings to prop up the local currency.
Coming back in equities the Japanese market closed lower for the second consecutive trading session. After a weak opening, tracking Wall Street`s plunge overnight, the market briefly traded in positive territory in the afternoon session as sentiment improved following a rally in the Chinese market. The benchmark Nikkei 225 index fell 0.1% to finish at 12,851.69 and the broader Topix index closed down 0.2% at 1,233.37.
On the economic front, Japan`s all-industry activity index dropped 0.9% on month in June, the Ministry of Economy, Trade and Industry reported Wednesday. The decline matched the estimates of most analysts. The index for the three months to June rose 0.5% from the previous quarter. The ministry also said that the index in June was 1.2% below its level a year earlier.
Meanwhile, the Bank of Japan said in its monthly report of Recent Economic and Financial Developments for August that the Japanese economic growth has been sluggish. According to the central bank, high energy and material prices and weak exports growth contributed to the sluggishness.
The Chinese market closed sharply higher on speculation that the government will soon undertake measures to boost the economy and the stock market. The gains came after Chinese Vice-Premier Li Keqiang said that there was a need to increase household incomes and rural consumption to cope with a weakening global economy. Brokerages, property developers and banks surged.
The benchmark Shanghai Composite Index jumped 7.6% - its largest percentage gains since late April to finish at 2,523.28. In Shenzhen, the All Share index soared 7.2% to 712.82.
On the economic front, there was some relief for the policymakers as the enterprise commodity price index, a measure of wholesale prices, rose 9.4 pct year-on-year in July, compared with a 9.5 pct year-on-year rise in June. Compared with the preceding month, the index was up 0.7 pct.
The People`s Bank of China said in a statement that prices of coal, electricity and oil products rose 26.7 pct year-on-year in July and were 4.7 pct higher than the preceding month. Coal prices in July surged 53.5 pct from a year earlier and were up 6.1 pct from the previous month. Crude oil prices rose 46.8 pct year-on-year and 4.1 pct month-on-month. Prices of electricity rose 2.9 pct year-on-year and were up 2.7 pct compared with June.
Non-ferrous metal prices fell 3.2 pct year-on-year and were up 0.6 pct month-on-month, while iron ore prices rose 45 pct from a year earlier and 3.3 pct from the previous month. Prices of steel products were up 44.1 pct year-on-year and 0.9 pct month-on-month.
Copper prices fell 1.4 pct year-on-year and were up 0.5 pct from June, while prices of gold rose 26.1 pct year-on-year and were up 5.4 pct month-on-month. Agricultural product prices in July were up 6.8 pct year-on-year and were up 0.3 pct month-on-month.
In Hong Kong, the Hang Seng China Enterprises tracked Shanghai stocks higher to end 4.3% up at 11,179.16. The benchmark Hang Seng Index rose 2.2% to 20,931.26.
The Australian stock market closed higher, recouping some of yesterday`s losses. The market started off higher, and extended its gains as resources stocks rose on stronger commodity prices. The benchmark S&P/ASX 200 index closed up 1.3% at 4,929.5 after plunging 2.4% on yesterday. The broader All Ordinaries index advanced 1.4% to finish at 4,997.5.
On the economic front, a forward-looking index of Australian economic growth declined in June to an annualized rate of 2.0%. The index, published by Westpac Bank and Melbourne University, shrank from a reading of 2.4% in May. The coincident index, measuring current economic activity, showed an annualized growth rate of 2.4% in June, down from May`s reading of 2.7%.
Australia`s Department of Employment and Workplace Relations said that the skilled job vacancies fell 1.7% on month in August. The index for the month stood at 88.4.
The New Zealand stock market closed higherending a two-day losing streak. The market started off weak, but staged a strong recovery and moved into positive terrain in late trade. The benchmark NZX 50 Index closed up 0.39% at 3,332.03 and the broader NZX All Capital Index advanced 0.47% to finish at 3,356.37.
The South Korean market closed lower for the third consecutive trading session on Wednesday. The market started off weak on Wall Street`s fall overnight, but recovered ground and moved into positive territory by afternoon and finished the session slightly below the flat line. Investors sold tech and shipyard shares, but bought steel and chemical stocks. The benchmark Korea Composite Stock Price Index or KOSPI declined 0.05% to finish at 1,540.71.
The Indian market surged in mid-afternoon trade to hit new intra-day high. The BSE 30-share Sensex closed up by 0.92% to 14,678.23. Key benchmark indices had surged in opening trade today on bargain hunting after sustained fall in the last five successive trading sessions. Strong Asian cues aided the recovery. The S&P CNX Nifty gained by 1.09% to 4,415.75.
Elsewhere, Taiwan`s weighted index gained 0.89% to 7,040.90 while Singapore`s Straits Times index increased by 0.86% to 2,751.75. In Malaysia the KLSE Composite Index was up by 0.35% to 1,073.21. In Indonesia, the Jakarta Composite increased 1.33% to 2,069.70.
In the other part of the world, European shares edged higher from two-week lows, as miners and oil producers advanced on the back of an up tick in crude-oil futures and investors also dipped a toe back into the battered financial sector.
Tracking the globe it was a similar story around the regions in Europe following the Asian market rebound. Of national indexes, U.K. FTSE 100 index rose 0.8% to 5,362.30, while the French CAC-40 index climbed 0.7% to 4,362.16 and the German DAX 30 index advanced 0.4% to 6,307.02.
On the economic front, the Bank of England released the minutes of monetary Policy meeting in which the committee voted 7-2 to keep the bank rate at 5.0% in August, with one member voting for a rise and one for a cut. The minutes showed the MPC as a whole agreed that a case could be made for a rate cut, even if most were worried that such a move would send a signal that they cared more about growth than inflation. The main issue for the committee was how persistent inflation was likely to be and how large a margin of spare capacity would be necessary to offset it.
Looking ahead the day left with leading economic indicators for Canada, which will be followed by retail sales for the same. In the evening we have EIA crude oil stock change for US for the week ended on 16 August 2008. In the late evening we have merchandise trade balance for the Japan
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