Asian Market Update by TradeTheNews staff

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

  1. TradeTheNews

    TradeTheNews ET Sponsor

    Asian Market Update: Limited upside for Asian stocks ahead of U.S. jobs data

    - Demand for Asian exports remain strong: Japanese exports are holding up strong, as machine orders data came in much better than expected (JP JAN MACHINE ORDERS MOM: 3.9% V 1.4% expected; YOY: 2.6% V 0.4% expected). In other data, Philippine exports surged (Jan Preliminary Exports YoY: 27.3% v 10.0% expected), hinting at the continuing strength of Asian exports.

    - Fed's Poole tries to talk up the U.S. economy: Poole said that he sees a lower chance of a recession than Greenspan, adding that the U.S. economy is pretty balanced.

    - U.S. housing market outlook: There was some more bad news on the U.S. housing front after the U.S. close. Homebuilder Hovnanian swung to a loss in 1Q07, adding that it does not see rapid recovery once the U.S. housing market bottoms. Their earnings highlight the fact that gross profit margins in the housing market is still under pressure and there's still more price cuts and write downs coming.

    - Asian Equities: On the back of a weakening JPY and some choppy trading, the Nikkei 225 traded in positive territory. Sentiment in Tokyo was boosted by the better than expected rise in January preliminary machine orders, which is a positive indicator for future business investment. Traders said that the futures and option settlement had little impact on the Nikkei cash market. Gains in Tokyo are being driven by technology shares, such as Sony and Canon. Japanese financial shares also gained, led by shares of Nikko Cordial. The Kospi index opened higher but later dipped into the red as heavy program selling (caused by foreign sales in futures market and accelerated sales by retail traders soured sentiment. The Aussie ASX200 could not take out a key Fibo resistance level at 5847.00, and moved back to the unchanged level towards the end of the session as traders grew cautious ahead of the NFP data. Gains on the ASX200 are being driven by mining shares for the second consecutive session on strong gains in commodities prices. Australian banking shares are currently trading mixed as there are some concerns about the Australian subprime housing market. The Hang Seng index is lower on profit-taking and being supported above the 19,000 level. After the rebound in Shanghai over the last few sessions brought the index back to record levels, traders once again worried over high valuations on Chinese equities.

    - Foreign exchange: The CHF gained steam as some Asian markets sold off towards the end of the week, perhaps hinting at more risk aversion setting in ahead of tomorrow's US jobs data. USD/CHF moved below a key support level at 1.2265, with a head and shoulders pattern forming on the daily charts (hinting at further CHF gains against the USD). The JPY remained soft as high yielding currencies remained well supported ahead of the US jobs data. Downside to EUR seems limited ahead of the jobs report, as some fear that the softer ADP reading could hint at a weaker than expected NFP reading (there has been a change in the calculation method of the ADP to try and improve its correlation with the NFP reading).

    - Commodities: Spot gold is higher by more than 0.35%, tracking the equities rebound. Shanghai Copper is little changed after the metal rose for the past 3 prior sessions, tracking the equity rebound.

    - OPEC chatter: Venezuela said that it is a priority at the upcoming OPEC meeting to verify production cut compliance. Analysts expect OPEC members to step up hawkish talk over the upcoming sessions, as they may be looking for more revenue assurance while heading into seasonal demand downturn. Crude gained in US trading on potential supply disruptions.