Reports » Asia

Asian stock market, economy and companies update (May 05, 2010)

Contributed by Trade The News

By Trade the News

- Plummeting confidence in the Greek relief package as well press speculation the fiscal worries may become more prevalent in Spain accelerated the Euro freefall below 1.2950, while also weighing heavily on US indices. Following a 2% drop in the Dow and 3% decline in the Nasdaq, Asian bourses are down sharply as well. S&P/ASX and Shanghai Composite are down about 1.3%, while tech heavy Taiex is down nearly 3%. Nikkei225 is still closed for Golden Week holiday, but may be poised for a steep drop upon reopening tomorrow. Ahead of Wednesday US session and the ADP April jobs report, front-month S&Ps are still down by just 0.1% at 1,171.

SPEAKERS/PRESS

- China: Concerns over govt measures to curb property speculation continued to resonate in China markets. Vice housing Minister Qiu Baoxing said further measures may be needed to prevent formation of asset bubbles. China Housing Ministry also noted it would do more to restrict sub-leasing of low-cost housing. Separately, think tank CASS saw property prices declining in major cities by the 2nd half and also begin falling shortly in lower-cost cities. Outside the housing sector, Asia International Open University professor Wang Guanyi wrote in local press that the revaluation of Yuan will not reduce the US trade deficit.

- Australia: Local press cited RBA Governor Stevens signaling that revised growth forecasts in Friday's policy outlook report could also contain upward revision for inflation. Digesting the most recent RBA rate hike, retail sector industry insiders have warned that average rate of sales growth will not return before 2011 because of higher lending rates and exit from fiscal stimulus. In terms of Australia's recent 40% tax on mining companies, PM Rudd said despite the business and political opposition, he will not compromise on the levy but may reconsider A$9B federal resource rent tax.

- Japan: Tokyo markets remained closed for the final day of Golden Week holiday. In geopolitical news, PM Hatoyama backed away from campaign promise to resolve the US military base issue, with local press suggesting the administration would no longer move the Schwab base outside the prefecture.

- New Zealand: Finance Minister English suggested unemployment may be nearing its peak, but is uncertain whether the jobless rate has peaked in Q4. Note, the 7.3% jobless rate reported in Q4 was above expected 6.8% and marked a 10-yr high.

EQUITIES
- In individual names, Westpac Banking Corp reported H1 Net A$2.9B v A$2.9Be, also declaring dividend of A$0.65 v A$0.56 prior. Westpac Tier 1 ratio rose to 8.6% from 8.5% prior, while impairment charges fell 44% y/y to A$879M. Westpac management subsequently noted it would be challenging to grow earnings in 2H, while also anticipating the RBA to pause on further rate hikes for some time until later this year. In Korea, Yonhap reported the govt may be looking to sell its 57% stake in Woori Finance, with the preferred bidder to be chosen by July 2011. In Japan, local press said Shinsei Bank would report FY09/10 Net loss ?140B v loss ?62Be in tomorrow's session and could also announce termination of merger talks with Aozora Bank.

CURRENCIES/FIXED INCOME/COMMODITIES
- In currencies, the Euro extended its decline to 1-yr lows, falling below 1.2950 during Asian trading hours before retreating to 1.2970. Late in the session, IMF's Straus-Kahn said there's risk of contagion resulting from Greek debt crisis, and that if any country should exit from the Euro zone, then it could mark end of the single currency. GBP/USD and AUD/USD traded sideways following sharp declines in US hour however, oscillating around 1.5130 and 0.9090 respectively. Japanese Yen continue to trade with heavy tone as well as USD/JPY rose about 50 pips toward 95.00 - point of resistance also encountered in prior session.

- In commodities, Spot Gold prices are marginally lower and trading below $1,170/oz. During yesterday's US session gold prices retreated from fresh 5-month highs near $1,192/oz, as the stronger dollar and overall asset liquidation reduced the safe haven appeal of the metal. In terms of the outlook for gold, one market players sees possible support around $1,169/oz.

- Crude oil prices are trading near $82/bbl and have lost over 0.2% on today's session on risk aversion and bearish weekly API data (API PETROLEUM INVENTORIES: CRUDE: +2.95M V +750KE; GASOLINE: +1.46M V +500KE). In oil market news, a NYT article quoted a BP executive as saying in a closed-door Congressional briefing that the Deepwater Horizon oil rig in the Gulf Of Mexico could conceivably spill as much as 60,000 bpd of oil versus the currently spillage which is estimated at about 5,000 bpd. In other commodities, Shanghai Copper prices have hit a 3-month low, tracking the weakness in Chinese equities.

- In M&A news, after agreeing to an improved A$9.5B bid from Newcrest Mining, Australia' Lihir Gold said it was open to evaluating competing bids. Prior reports have suggested that Lihir may have held early stage talks with Newmont Mining.

ECONOMIC DATA
- (UK) UK Apr BRC April Shop Price Index: 2.0% v 1.2% prior
- (AU) AUSTRALIA APR AIG PERFORMANCE OF SERVICE INDEX: 52.3 V 48.4 PRIOR (5-month high)
- (PH) PHILIPPINES APR CPI M/M: 0.5% V 0.6%E; Y/Y: 4.4% V 4.5%E
- (AU) AUSTRALIA MAR BUILDING APPROVALS M/M: 15.3% V 0.8%E (multi-year high); Y/Y: 51.6% V 25.6%E
- (HK) HONG KONG APR PMI: 55.3 V 54.9 PRIOR
- (IN) INDIA APRIL MARKIT SERVICES PMI: 62.1 V 58.1 PRIOR (highest since Jul 2008)
- (ID) INDONESIA CENTRAL BANK LEAVES REFERENCE RATE UNCHANGED AT 6.50%, AS EXPECTED