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Asian stock market, economy and companies update (April 26, 2010)

Contributed by Trade The News

By Trade The News

- Asian equity markets are in the green across the board, staging a catch-up rally to Friday US index gains following a strong set of housing data. Entering the final hour of Tokyo trading, Nikkei225 is leading the charge with a near 2% gain, helped by improvement in Corporate Service Price Index data and a weak Yen currency. Taiwan's Taiex is up 1.9%, Korea's Kospi is up 1.2%, and Sydney trading is closed for the session. Shanghai Composite, while still up a modest 0.1%, is visibly impacted by govt steps to contain the rising housing prices. With the US earnings season expected to shift into higher gear this week, front-month S&Ps point to a slightly higher open with a 0.1% gain.

SPEAKERS/PRESS
- Chinese press reported the annual property tax levy rumored to have been tested on a trial basis will take hold in Beijing, Shanghai, Shenzhen and Chongquing. A separate report said China lenders would follow Bank of China in raising lending rates on 1st, 2nd, and 3rd homes to 85%, 110%, and 120% of the PBOC benchmark rate. Central bank officials from China also reflected on the prospects for the economy. Gov Zhou said China can meet its target GDP with no double-dip in the global economy, also warning it is critical to pay attention to the presently mild but expected to rise inflation. A former PBoC adviser Yu was slightly more upbeat, estimating China GDP at 9.5% in 2010 and urging policymakers to raise interest rates. Separately, a trade ministry official said it is unlikely that China will return to pre-crisis trade levels.

- Elsewhere in the region, a second Japanese press report saw approval rating for PM Hatoyama continue to plummet below 25%. In Korea, the BOK extended its currency swap agreement with the BOJ, but was also rumored to have reduced the scale of the agreement. South Korea Fn Min Yoon warned the global recovery could yet be thwarted by exit from stimulus programs because of the low-rate environment relied upon for growth.

- IMF managing director Strauss-Kahn offered a similarly cautious tone, suggesting some risks do remain in the global economy but also pointing out an improvement in conditions from 6 months ago. Strauss-Kahn said high debt levels and unemployment are key challenges to the economy. On the topic of Greece, IMF's Lipsy supported the Greece bailout as appropriate, also noting that austerity measures require some support. Lipsky also said he does not expect Greece to "go bust", and that the nation is aware of the fiscal adjustment extent.

EQUITIES
- In individual names, Toyota gained about 4% on press speculation the company may post FY09/10 op profit of ?50B, above the forecast of op loss of ?20B provided on Feb 4th. Japan's big three auto names also reported monthly production metrics that saw Toyota continue to do well despite the recalls. TM production rose +97% y/y (773K units), Honday rose +62% y/y (349K units), and Nissan rose +85% y/y (318K units). Mitsubushi Motor was reported to consider a partnership with Chinese producers, also posting strong production growth of +102% y/y (119K). Also on the Nikkei, Sumitomo Chemical and OJI Paper both raised FY09/10 profit guidance, while a healthcare name Eisai was rumored to have completed clinical trials of its insomnia drug.

CURRENCIES/FIXED INCOME/COMMODITIES
- In currencies, speculation the Fed is closer to cutting its MBS balance sheet holdings helped boost the dollar against the Yen. USD/JPY traded up to 3-week highs above 94.35, while AUD/JPY hit its highest level since Sept of 2008 above 87.50. In European majors, EUR/USD gapped down about 40 pips to 1.3330, but closed the drop rising to 1.3370. Cable remained well bid despite the shroud of uncertainty with two weeks to go ahead of the elections and the critical debate on the economy expected for Thursday, rising above 1.5450. GBP also continued to outperform the EUR, with EUR/GBP cross sliding to 0.8650. In UK economic data, Hometrack Housing Survey saw slower m/m growth, but a multi-month high in y/y terms, prompting Hometrack Research Director to warn that the slowdown remains exacerbated by May elections. In commodity FX, the Aussie opened slightly lower but benefited from risk appetite to test 0.9290. Ahead of RBNZ rate decision on Wednesday, Kiwi Dollar aimed for 3-month high above 0.72. New Zealand Herald reported the central bank is unlikely to raise interest rates in this week's meeting, but may provide clues of a tightening as early as June

- Most commodity prices are higher, tracking the gains in Asian equities. Crude oil prices have gained and are currently trading above $85/bbl. In oil market news, on Sunday Kuwait's Oil Minister was quoted as saying that OPEC might take steps to increase supplies, if oil continues to rise and move above $100/bbl, after prior reports suggested that OPEC was targeting a $70-80 range for oil prices for the next 10 years Spot Gold is trading above $1158/oz, as Greece's request for assistance from the IMF has helped drive XAU/EUR to a fresh record high. In other commodities copper prices are higher by more than 0.50%, tracking equities.

ECONOMIC DATA
(UK) UK APR HOMETRACK HOUSING SURVEY M/M: 0.2% V 0.3% PRIOR (3-month low); Y/Y: 1.8% V 1.3% PRIOR (biggest gain since Jan 2008)
(JP) JAPAN MAR CORP SERVICE PRICE INDEX Y/Y: -1.1% V -1.4%E (smallest decline since Nov 2008)
(CH) China Mar Leading Index: 105.0 v 105.1 prior
(SI) SINGAPORE MAR INDUSTRIAL PRODUCTION M/M: -1.5% V -4.0%E; Y/Y: 43% V 30.0%E