Asian Market Update by TradeTheNews staff

Discussion in 'Trading' started by TradeTheNews, Feb 8, 2007.

  1. TradeTheNews

    TradeTheNews ET Sponsor

    Asian Market Update: Japanese capital spending may have peaked

    - Nikkei boosted as February options settle: The Nikkei 225 was boosted today as many investors are now ready to start buying after the settlement of February Nikkei 225 options. In early afternoon trading, the Nikkei's rise above the morning high triggered more buying as shares of Mizuho Financial surged after an upgrade at Merrill Lynch. Japanese shipping related shares rose on speculation that freight rates will rebound. The Kospi index is little changed as sharp gains in Kookmin Bank were counterbalanced by losses in shares of Hana Financial Group following its earnings report. The ASX 200 is near record levels led by gains in energy-related shares. Gains in energy related shares offset declines in metals stocks as fears of losses in the hedge fund industry with respect to metals contracts linger. The Hang Seng traded lower as shares of HSBC declined for the second consecutive session, after the company reported that its loan loss provisions would exceed prior forecasts due to the worsening of the US sub-prime mortgage industry. Overall, the Hang Seng is currently higher by 0.5% on the week. Chinese equities traded in negative territory as traders are showing caution ahead of next week's CPI release.

    - Japanese capital spending may have peaked: Japan's machinery orders dropped for the first time in 3mnths, a signs of slowing Japanese corporate spending. The data is significant given the fact that corporate spending had been the main driver of growth in Japan's economy for the later part of 2006. Most analysts agree that this is a genuine slowdown in corporate spending, confirmed by recent data showing that Japan's bank lending failed to accelerate in January.

    - Forex markets were quiet, with traders largely sidelined ahead of the G7 meeting. The JPY is facing gradual selling pressure as markets start thinking that G7 statement won't criticize the yen's weakness. The EUR is also benefiting from news that Russia has raised the share of the currency in the euro-dollar basket against which it manages the ruble's exchange rate. EUR/JPY tested highs made at the end of January, as technicals show that the EUR might be overbought at these levels.

    - Oil prices rose above $60 a barrel as traders followed a $2 leap the day before. Cold weather in the U.S. seems to be the main reason for the climb in oil prices, but tensions between Iran and the U.S has managed to take oil above the psychological $60 mark. Technically, crude looks overbought at these levels, and many analysts suggest that the market remains too focused on short-term factors. The National Oceanic and Atmospheric Administration continues to forecast normal to below-normal temperatures across the United States until at least Feb. 22