Asian Market Update by TradeTheNews staff

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

  1. TradeTheNews

    TradeTheNews ET Sponsor

    Asian Market Update: Markets show renewed appetite for risk, but caution remains

    - Aussie jobs data comes in strong, but not strong enough to fuel wage inflation concerns: (AU FEB EMPLOYMENT CHANGE: 22K V 15K expected; UNEMPLOYMENT RATE: 4.6% V 4.5% expected). There are still few signs that the recent RBA rate hikes are slowing down the Aussie economy, as the boom in mining and construction led to a surge of jobs in the Aussie economy during February. Traders were not willing to push the Aussie dollar higher, as equity markets remain volatile and markets uncertain about the outlook for global growth.

    - Chinese February Industrial Production surges, but analysts want to wait for March data to confirm whether exports are in fact accelerating: (CH CHINA FEB INDUSTRIAL PRODUCTION YTD YOY: 18.5% V 15.0% expected). Analysts note that the start of the year is exceptionally volatile for this data series, and suggested investors wait for the March data to test whether Chinese exports are in fact reaccelerating. Fears linger of more tightening from the PBoC in the near term, with most analysts expecting a hike in the reserve ratio.

    - More bad news on the Japanese economy: The Nikkei news agency reports that the Japanese Cabinet office is expected to report on Friday that the January coincident index fell to 45% v 55.6% prior (this would be the first drop below 50% in 10 months).

    - Japanese investors continue selling of JPY: Japan net foreign bond investment came in at -¥89.7B in week ended March 10, but Japanese investors bought a net ¥102.7B of foreign stocks during same week. Some suggest that even if structural outflows re-emerge as a driver of JPY weakness, we also need a fall in volatility to push EUR/JPY and USD/JPY back to previous highs.

    - Asian Equities: After falling more than 500 points during the prior session, the Nikkei 225 is gaining by close to 1.5% and holding above the 16,900 level, tracking the rebound in U.S. equities. Japanese exporters rebounded as the yen weakened. Steel-related shares also experienced strong gains on dividend plans. Shares of Mitsubishi Heavy continued to gain for the second consecutive session on momentum from last session's nuclear reactor contractor award. The KOSPI is higher by more than 1%, as strong retail sales data for February boosted the shares of local retailers. The ASX 200 index is higher by more than 1.5% and above the 5,800 level as miners rebounded strongly. The Hang Seng is higher by more than 1% and above the 19,000 level. Chinese equities gained by more than 1%, led by an advance in the shares of property developers. Chinese equities are gaining on speculation that more mutual fund investments will flow into equities and on stronger than expected industrial output data.

    - Commodities: Crude oil is trading higher at $58.13, tracking the rebound in equities and on US weekly crude and gasoline inventories coming in lower than expected. Spot gold is trading higher from 1-week lows, tracking gains in other assets classes. Shanghai copper is higher on declining global copper stockpiles.

    - Tentative agreement reached on Iran sanctions: The U.S. and Russia saiod that 6 nations have reached a tentative agreement with regards to sanctions against Iran. The draft had been sent to their respective capitals for approval, which is not automatic. Russia's U.N. Ambassador Vitaly Churkin said "by and large it has been agreed." The draft text would increase an earlier list of Iranian groups and companies subject to an assets freeze and ban all arms exports from Iran.