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Asian stock market, economy and companies update (April 29, 2010)

Contributed by Trade The News

By Trade The News

- Despite another S&P downgrade in the EU during the US hours - this time a one notch move on Spain to AA - the risk trade is holding up slightly better relative to the freefall of the prior session. US markets finished slightly higher by 0.5%, boosted by the Fed statement that saw virtually no change in its commitment to low policy for extended period. Nikkei225 was closed on the session. KOrea's Kospi and the S&P/ASX are both down about 0.5%, Taiwan's Taiex is nearly flat, while Shanghai Composite is up a modest 0.2%, benefiting from IMF boost on Asia. Ahead of the Thursday US open, front-month S&Ps are down a marginal 0.1% at 1,189.

SPEAKERS/PRESS
- RBNZ decision and economic data in New Zealand marked the primary event risk in today's session. Kiwi central bank left rates unchanged at 2.50% as widely expected and reiterated commitment to hiking in the coming months, but also noted inflation would be in target range. RBNZ statement also suggested that credit growth is contained, business spending still weak, and household spending cautious. Kiwi Dollar sold off following the decision, with markets anticipating a firmer commitment to higher rates to come as early as the next decision in mid-June. New Zealand trade surplus rose to a 10-month high, but did little to relieve the pressure on the Kiwi. Both imports and exports components in Kiwi trade balance were also above estimates.

- IMF came out with it Regional Economic Outlook Report, boosting 2010 Asia GDP target to 7.1% from 6.9% and 2011 GDP to 7.1% from 7.0%. The agency also noted China's monetary stimulus could be removed before the fiscal support expected to be maintained this year. IMF saw stimulus to be reduced over next 2 years, also noting some capital controls and currency flexibility could weigh on inflows. On risks, IMF cited global risk aversion, but also pointed to growth and interest rate differentials supporting capital inflow. Regarding China, IMF said property investment is likely to remain strong despite govt efforts. On a related noted, Chinese press reported that Shenzhen city would limit families to ownership of 2 homes, tracking steps planned by Beijing in prior session.

- IN other comments related to the region, PIMCO's Masanao said Bank of Japan would maintain its current policy into next year leading to eventual weakness of the Yen. Masanao also suggested medium term Japan govt bonds are relatively safe, but long-term bonds need to be avoided. Other PIMCO officials said currencies of South Korea, China, and Singapore are "attractive". Outside Asia, PIMCO's El-Erian said the disorderly moves of the recent days in Greek bonds have increased the risk of bank deposit outflows and capital flight.

EQUITIES
- With Tokyo on holiday, Asian earnins season was contained to just a few notable names. In Korea, SK Telecom reported reported Q1 Net KRW322B v KRW330Be, Op Profit KRW480B v KRW532Be, Rev KRW3.0T v KRW3.1Te. In Sydney, ANZ Bank posted H1 Net A$1.9B v A$2.4Be, with Tier 1 ratio: 10.7%. ANZ also said regional outlook is fairly positive, but global economic uncertainty resulted in higher spread volatility. Also in Australia banking, CEO of Commonwealth Bank said wholesale funding costs likely to be impacted by fiscal concerns in Greece and elsewhere. In Taiwan, Acer reported Q1 Net NT$3.29B v NT$3.1Be, forecasting Q2 shipments to be similar to Q1, but also warning the PC average selling price would fall as shipments expand over the medium term.

CURRENCIES/FIXED INCOME/COMMODITIES
- In currencies, European majors likewise some modest relief despite further credit rating activity. EUR/USD traded as high as 1.3240, while Sterling rose about 20 pips after better than expected UK housing data. In commodity FX, Kiwi dollar fell over 50 pips to as low as 0.7150 after RBNZ rate decision, while AUD/NZD rose to 1.29 handle. AUD/USD also found buying interest at 0.92 in US session, rising as high as 0.9260. Japanese Yen traded in a thin range against USD, bouncing by some 15 pips on either side of 94.00.

- In commodities, Spot Gold prices are little changed and trading near $1,165/oz, as markets continue to focus on the sovereign concerns in Europe. During yesterday's session, XAU/EUR rose to another fresh record high of EUR893.97. In terms of physical demand for gold, the SPDR Gold Trust ETF's holdings increased and rose to a record high (1,153 metric tons) for the third consecutive session. In market commentary, the CEO of Australia's largest gold producer, Newcrest, said he was still positive on the long-term outlook for gold, but the concerns regarding EU sovereigns could increase volatility. Crude oil prices are lower and trading near $83/bbl. On yesterday's US session, oil prices gained as the FOMC's statement was initially seen as a positive for risk appetite. In other commodities, copper prices are higher by approximately 0.10%, tracking the early gains in Chinese equities.

ECONOMIC DATA
- (NZ) RBNZ LEAVES RATES UNCHANGED AT 2.50%
- (KS) South Korea May Business Survey Manufacturing: 107 v 105 prior; Non-Manuf: 94 v 85
- (NZ) NEW ZEALAND MAR TRADE BALANCE (NZ$): 567M V 354ME (10-month high); IMPORTS: 3.49B V 3.33BE; EXPORTS: 4.06B V 3.72BE
- (HK) HKMA leaves rates unchanged at 0.50%, tracking the Fed (as expected)
- (AU) AUSTRALIA FEB CONFERENCE BOARD LEADING INDEX: -0.3% V -0.2% PRIOR