Asian Market Update by TradeTheNews staff

Discussion in 'Trading' started by TradeTheNews, Feb 15, 2007.

  1. TradeTheNews

    TradeTheNews ET Sponsor

    Asian Market Update: Cautious trading ahead of BoJ meeting next week

    - Equities: The Nikkei 225 is trading in tight ranges around 17850, as profit taking and bargain hunting is canceling each other out. Japanese equity volumes reflect growing caution ahead of the BoJ meeting next week - volume on the Nikkei during the morning session was 1.03B shares, down from 1.23B yesterday morning. Shares of Canon bucked the declining trend to trade higher by more than 3% after the company said it plans to pursue an aggressive share repurchase plan. The KOSPI is little changed as declines in shares of Woori Finance were offset by gains in shares of Samsung. Chinese equities are extending sharp gains from the prior session and are now higher by more than 1%. During today's session, a leading Shanghai Official proposed a trading system that would allow investors in Shanghai and Hong Kong to buy and sell shares in both markets in the 38 companies with dual listings in order to prevent an equity bubble. For the second consecutive session the ASX 200 index failed to break above the 5600 level and is currently lower by more than 0.50% on profit taking.

    - Asian Currencies: The yen is lower across the board on profit taking following last session's GDP reading. The JPY also came under pressure after December's tertiary industry index came in worse than expected (MoM: -0.4% v -0.1% expected). Year-on-year, the index rose to the highest level since 1988 (1.3% following a revised 1.3% increase in November). There are some signs of moderate wage pressures building in the Japanese economy. Japan's December total cash earnings were revised higher to -0.1% y/y from the preliminary reading of -0.6%. The KRW opened trading higher against the JPY and USD, but is in negative territory after the South Korea Ministry of Finance expressed concerns about the KRW's recent gains against the yen. Also, some Korean bankers believe that the there are signs of slowing demand in the housing loan market. The Taiwan dollar is tracking the weaker yen.

    - The AUD continues to rebound against the softer USD, but upside seems limited as traders await RBA governor Stevens' testimony next week. Caution over carry trades is also capping gains in the AUD after AUD/JPY fell below 94.00 after the Japanese GDP data. January New Zealand home sales rose 19% y/y, while January median house prices rose 9% y/y, adding credibility to RBNZ Governor Bollard's concerns about the growth of the NZ real estate market.

    - Japanese bonds: Japanese bond prices rallied on the domestic equity weakness, tracking sharp gains in US treasuries. JGB gains were capped by caution ahead of the BoJ meeting next week. Yields on the short end of the curve, more sensitive to rate expectations, were down 1.76% compared to 10yr yields dropping 2.57%. Many analysts believe that JGB yields are likely to remain stuck in ranges even if the BoJ had to hike rates next week.

    - Commodities: Crude oil is trading around the $58 level on few catalysts. Shanghai copper rose to a one month high and gained for the 3rd consecutive session on signs that demand in China may continue to show strength. Shanghai Copper is set for its largest weekly gain since July. Spot Gold is higher by more than $1.50 and holding above the $673 level.