Asian Market Update by TradeTheNews staff

Discussion in 'Trading' started by TradeTheNews, Feb 26, 2007.

  1. TradeTheNews

    TradeTheNews ET Sponsor

    Asian Market Update: Yen benefits once again from verbal intervention

    - Crude oil spikes up, trading around $61.60, as more speculators enter the crude market: Fund buying in crude is likely to increase volatility over coming sessions, as data from the New York Mercantile Exchange point to an increase in investment by large funds (last week was the first time this year that the large speculative funds are showing a net long position in crude oil). Some analyst suggest that further upside to crude may be limited, as fears that Iran will cut off oil exports as a backlash to sanctions is probably overblown. (Iran desperately needs its oil income as political support for Ahmadinejad is waning)

    - Yen benefits once again from another round of verbal intervention from Japanese officials over Paulson meeting: Japanese officials once again said that Economy Minister Omi will discuss domestic and overseas economic issues with US Treasury Sec Paulson, leading to yen gains in Asia. After markets have started to ignore verbal intervention from Japanese officials, the introduction of "the Paulson meeting" is a new verbal intervention tactic for the Japanese. The current rebound in yen will likely be a set back after being oversold, rather than a reversal. Paulson has repeatedly said that he is not concerned about the lows being set by the JPY against the USD.

    - Major Forex: The Kiwi traded near 14mnth highs against the USD after spiking through the 0.7100 level. ANZ bank said the NZD moved through selling interests easily overnight as stop loss orders were triggered around the 0.7080 level. However, NZD/USD struggled to extend gains above 0.7100, and failure to break above this level would mean that a double top has formed at 0.7100. USD remains slightly softer against the EUR, with the USD's mild gains against EUR coming from cross selling pressing in EUR/JPY rather than USD's own strength. Further consolidation is still likely to follow as long as EUR/USD is kept below 1.3196 high. AUD/USD traded higher by 0.10%, as light buying in AUD/JPY by Japanese banks has also helped keep AUD supported.

    - Equities: After a firmer than expected start, the Nikkei 225 is slightly negative on profit taking. Gains on the Nikkei are being driven by drug stocks and utilities stocks while property stocks are trading in the red. Nikkei profit taking in the afternoon session is unlikely to build up much further, as some traders are saying that a strong market makes it hard to find good timing to lock in profits. Toyota shares held their ground against a falling market on news that the company plans to spend some ¥100B to build a sport utility vehicle assembly plant in Mississippi. Japanese automobile stocks were trading mixed. South Korea's KOSPI index is trading lower from record levels, driven by declines in shares of Kookmin Bank and Samsung Securities. Hynix Semiconductors fell on concerns with respect to DRAM memory prices. The Hang Seng index is lower for the 3rd consecutive session and opened below the psychological 20,500 level. Declines on the Hang Seng are being led by China Mobile, whose shares are lower for the 3rd consecutive session. The ASX 200 in lower and holding near session lows, as profit-taking has been seen in metals, media and banking shares. The ASX is currently holding just above the 6,000 level.

    - PBoC governor Zhou says in a press interview that it is too early to tell the Chinese CPI trend for the next years, adding that a rate hike is among the options to deal with inflationary pressures. Zhou also said that the yuan may rise faster if the Chinese trade surplus widens.