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Asian stock market, economy and companies update (April 28, 2010)

Contributed by Trade The News

By Trade The News

- Asian equity markets opened sharply lower, tracking the near-2% drop in the Dow and the Nasdaq as well as the near-2.5% contraction in the S&P500, as risk aversion permeated across asset classes following S&P downgrade of Portugal and Greece. Entering the final hour of Tokyo trading, Nikkei225 is off by just over 2% after falling as much as 3% earlier in the session. Taiwan's Taiex, the Kospi, and S&P/ASX are down about 1%, while Shanghai Composite is lower by 0.3%, supported technically by an 18-month low below 2,900 tested briefly in the prior session. Ahead of Wednesday's US session and the FOMC decision, front-month S&Ps are up a marginal 0.1% at 1,182.

SPEAKERS/PRESS
- In notable economic data, Aussie CPI saw a similarly positive print for Q1 to PPI reported in the prior session. Y/Y headline marked the highest rate of growth since Q4 of 2008, even as the RBA trimmed mean y/y rose at the slowest rate since Q3 of 2007. Nonetheless, that 3% mark is still on the cusp of the central bank target band, boosting the rate hike probability ahead of next week's RBA meeting from around 25% to nearly 40%. In Japan, consumer spending continued to improve, as retail sales rose for the third consecutive month and also saw the highest y/y pace of increase in at least 5 years.

- Over in China, PBOC Adviser Zhou urged greater interest rate flexibility in the coming years, noting that policy should reflect improving market conditions. In the housing sector, Beijing authorities were reported to plan on ending loans on 3rd homes in the capital and also require for potential buyers to have paid taxes in the city for at least a year. In other govt measures considered as part of ongoing efforts to curb housing speculation, Chinese press said the sale of property developer shares would be restricted, said to be directed at some 45 companies seeking to raise over CNY100B this year.

EQUITIES
- Among Tokyo names reporting results, Japan's largest steelmaker Nippon Steel posted somewhat disappointing results, with FY09/10 Net loss ?11.5B v loss ?9Be, Op Profit ?32B v ?34Be, and Rev ?3.5T v ?3.5Te. Sumitomo Metal's loss as well as guidance were also short of forecasts, posting FY09/10 Net loss ?50B v loss ?46Be, Op loss ?0.9B v profit ?2Be, Rev ?1.29T v ?1.3Te and guiding FY10/11 Net ?50B v ?67Be, Op Profit ?90B v ?129Be. Kobe Steel was a brighter spot, posting FY09/10 Net profit ?6.3B v loss ?8Be, Op Profit ?46B v ?41Be, Rev ?1.67T v ?1.7Te. In the tech space, Denso results were mixed, with FY09/10 Net ?73B v ?77Be, Op Profit ?136B v ?116Be, Rev ?3.0T v ?2.9Te and FY10/11 guidance of Net ?98B v ?110Be, Op Profit ?138B v ?161Be, Rev ?3.06T v ?3.1Te. Looking ahead to after-hours earnings calendar, Honda, NTTDoCoMo, and Mizuho Securities earnings are on tap.

- In Japanese press, Asahi denied speculation it would post Q1 op profit of ?55B v ?46.Be. Also in Tech, Hoya's Magnetic Media Operations were acquired by Western Digital for about ?22B. Elsewhere, Toray confirmed press speculation of partnership with Daimler on in carbon fiber market, and Japan Tobacco was reportedly planning a near-40% price hike on some of its brands.

CURRENCIES/FIXED INCOME/COMMODITIES

- In currencies, European majors consolidated the freefall following S&P downgrades during the US session, with EUR/USD rising back above 1.32 and GBP/USD briefly approaching 1.53. In commodity FX, the Aussie outperformed across the board after strong CPI data, with AUD/USD rising some 90 pips to 0.9230. Canadian dollar remained weaker against the greenback above 1.0120 after BOC Gov Carney warned about the strength of the loonie. Ahead of tomorrow's RBNZ decision, Kiwi dollar rose about 50 pips above 0.7150. Following risk-aversion related rally in the Yen, USD/JPY remained in check, trading sideways between 93.00 and 93.40.

- Most commodity prices are declining as concerns related to Greece have started to spread to other EU countries. Spot Gold prices are lower on profit taking, after the metal rose to the highest level since April 12th on yesterday's session, as concerns about the EU pushed XAU/EUR to another record high. Looking ahead, the focus on gold markets will continue to be the events related to Greece, in addition to today's FOMC meeting. In terms of physical demand for gold, the holdings of the SPDR Gold Trust ETF rose to a record high (1,146 metric tons) for the second consecutive session. Crude oil prices are lower by more than 0.20% and trading near $82/bbl on the rise in risk aversion and mixed weekly US API inventories data (API PETROLEUM INVENTORIES: CRUDE: +5.3M V +750KE; GASOLINE: -660K V +500KE; DISTILLATE: -1.37M V +1.2ME; UTILIZATION: 84.7% V 85.9%E). On tomorrow's session, the US Department of Energy will release its weekly inventories data. In other commodities, copper prices are declining, in line with the weakness in equities.

- In commodity related news, China's steel association (CISA) noted that the price negotiations between Chinese steel companies and the global iron ore miners had effectively ended, as the group believes that the global iron ore miners are operating like monopolies. Also, the CISA said China is seeking to become less dependent on foreign iron ore supplies. In Australia, coal miner MacArthur Coal denied press speculation that Nobel Group was considering whether to raise it's A$12.60/share bid for MacArthur. Additionally MacArthur reported that its Q1 coal sales rose by 50% y/y to 1.2M tons.

ECONOMIC DATA
- (KS) SOUTH KOREA MAR CURRENT ACCOUNT: $1.7B V $167.6M PRIOR; GOODS BALANCE: $4.4B V $1.6B PRIOR
- (JP) JAPAN MAR RETAIL TRADE M/M: +0.8% V -0.6%E (third consecutive rise); Y/Y: 4.7% V 3.6%E (multi-year high); LARGE RETAILERS' SALES: -5.0% V -5.0%E
- (AU) AUSTRALIA Q1 CPI Q/Q: 0.9% V 0.8%E, Y/Y: 2.9% V 2.8%E (highest since Q4 of 2008); RBA TRIMMED MEAN Q/Q: 0.8% V 0.6%E; Y/Y: 3.0% V 2.9%E (lowest since Q3 of 2007)
- (NZ) New Zealand APR NBNZ Business Confidence: 49.5 v 42.5 prior