Reports » Asia

Asian stock market, economy and companies update (May 07, 2010)

Contributed by Trade The News

By Trade the News

- Asian equity markets are tracking the extreme panic selloff in the US bourses, where the Dow at one point fell by nearly 10% below 10,000 mark amid rumors of "fat-finger" trades and other technical malfunctions. Afterhours, the reports prompted the Nasdaq and NYSE to bust all trades 60% away from price levels around 2:40pmET amid growing speculation of a closer regulator look at program trading. Dow recovered off those final hour lows, but still fell just over 3% on the day. In the final hour of Tokyo trading, Nikkei225 is down 3.1% after falling by over 4% in the first hour. Elsewhere, Korea and Sydney markets are down by over 1%, while Taiwan and Shanghai are falling over 0.5%. Ahead of Friday's non-farm payrolls data expected to revive some market optimism, front-month S&Ps are up 0.3% around 1,126.

SPEAKERS/PRESS
- Japan: With the Nikkei225 falling as much as 4% early in the day, Bank of Japan stepped in with a ?2T injection into money markets. PM Hatoyama also said he was extremely concerned over European crisis, while Fin Min Kan gauged its impact on Japan's financial system as small. Govt spokesman Hirano said FX markets are being closely watched however, also calling for EU/IMF to address the confidence crisis in Greece and EU, pledging to watch developments to determine if further action is needed. In other Japan speakers, Banking Min Kamei said Japan cannot escape impact of Greek financial crisis, while Strategy Min Sangoku remarked that the impact of fiscal crisis is likely to be limited in Asia. Also briefly helping sentiment, White House offered support to Greek govt and the EU/IMF measures, also announcing expected emergency G7 fin min conference during Friday session.

- Australia: Reserve Bank of Australia's quarterly policy statement affirmed 2010 GDP forecast at 3.25%, but raised 2011 view to 3.75% from 3.5% and also lifted underlying inflation for 2010 to 2.75% from 2.5%. RBA reiterated this week's decision commentary, noting "the trough in inflation later this year now looks likely to be in the top half of the target band, rather than in the middle of the band as previously forecast." Australia Treasurer Swan said the central bank outlook is a reflection of economic stability in the economy.

- UK Elections: Probability of a hung Parliament is significantly higher as the last quarter of UK election results continue to roll in. Conservatives' 284 seats vs Labour 229 and LibDem's 50 is insufficient for Cameron to form a new govt and will likely require a compromise for either major party to form a minority govt or a coalition.

- China: China Securities Journal citing State Information Center report put Q2 economic expectations for GDP 10.7%, CPI 4.2%, PPI 7%. Note that GDP was down from 11.9% reported in Q1 in mid-April. The same feature also forecasted New Bank Loans around CNY700B v CNY510.7B m/m and consensus estimates at CNY585B. In housing sector, Chinese press reported the city of Shanghai may limit purchases of homes by families to two.

EQUITIES
- In individual names, Panasonic reported FY09/10 Net loss ?103B v loss ?120Be, Op profit ?190B v ?162Be, Rev ?7.4T v ?7.3Te, also guiding FY10/11 net ?50B v ?110Be , op profit ?250B v ?274Be, Rev ?8.8T v ?8.6Te. Bridgestone posted Q1 Net profit ?17.6B v loss ?35B y/y, Op Profit ?36B v loss ?12B y/y, Rev ?659B v ?568B y/y, also boosting 1H forecast to Net ?27B v ?11B prior, Op Profit ?50B v ?31B prior, Rev ?1.36T v ?1.32Te. Fuji Heavy reported FY09/10 Net loss ?16.5B v loss ?13Be, Op Profit ?27.4B v ?23Be, Rev ?1.4T v ?1.4Te.

CURRENCIES/FIXED INCOME/COMMODITIES
- In currencies, Sterling fell over 3 big figures below 1.46 as UK elections heightened expectations of a hung Parliament before recovering to 1.47. EUR/USD largely consolidated the US session collapse, rising from 1.2520 US lows above 1.27. In commodity FX, AUD/USD bounced from 0.87 US low to 0.89, while USD/CAD briefly rose above 1.07 in US hours before falling back below 1.0550. Japanese Yen, big winner amid US panic also saw some weakness, as USD/JPY rose from 88.00 US session low to 92.00.

- In commodities, crude oil prices are marginally higher as of 2:27 EST and trading near $77/bbl, following the sharp declines seen in the NY trading session on continued concerns about European sovereigns. Spot Gold is lower on profit taking and trading above $1,200/oz. During yesterday's session, gold prices closed above $1,200/oz as markets continue to debate its safe haven appeal. Additionally, XAU/EUR hit a fresh record high on yesterday's session, supported by the weaker Euro. In other commodities, Shanghai Copper prices are sharply lower, tracking the equity weakness in China.

ECONOMIC DATA
- (AU) AUSTRALIA APR AIG PERF OF CONSTRUCTION INDEX: 55.8 V 51.0 PRIOR (3-month high)
- (JP) JAPAN APR MONETARY BASE Y/Y: 2.9% V 2.1% PRIOR (3-month high)