Asian Market Update by TradeTheNews staff

Discussion in 'Trading' started by TradeTheNews, Mar 16, 2007.

  1. TradeTheNews

    TradeTheNews ET Sponsor

    Asian Market Update: Equity markets continue to dictate movement in currency markets

    - Forex: Equity markets continue to dictate movement in currency markets. The market focus remains on risk reduction, stocks and whether the U.S. economy will slow down, not on interest rate differentials. The JPY rallied as the Nikkei moved lower, with USD/JPY dipping below 117.00. Renewed worries over the U.S. economy led to investors moving to safe-haven assets, as USD/CHF dipped below 1.2108. Technical analysts suggest a convincing break of the 1.2108 low will hint that recent decline from 1.2571 has resumed. The Aussie dollar got a lift after hawkish talk from the RBA assistant governor, pushing AUD/USD above 0.7900 despite other high yielding currencies losing value.

    - Hawkish talk from RBA assistant governor Edey: Edey said that the factors pushing up inflation are still in place, adding that inflation is likely too high. The AUD/USD jumped above 0.7900 after Edey's comments, but several analysts point to the limited upside for AUD/USD at these levels. While equity markets remain volatile and markets uncertain about the outlook for global growth, market participants will remain wary of becoming too bullish towards the Aussie just yet.

    - The Nikkei failed to gain inspiration from the stronger Wall Street performance, as selling of futures and losses in banking shares dragged the Nikkei down by almost 1%. Japanese exporters are lower on gains in the yen, and the biggest losers were the domestic-demand sectors (insurers, real estate, banking). Recent gainers on the Nikkei traded sharply lower as traders booked profits amidst uncertainty over the U.S. economic outlook. The Kospi is being dragged down by exporters and shares of Posco Steel. Posco denied that it was in talks to be acquired by Mittal Steel. The Kospi index is lower by more than 0.30%. The Hang Seng index is lower by more than 0.5% on declines in shares of China Life and HSBC. The Hang Seng is holding below the 19,000 level and is set for its longest weekly downtrend in 9 months as traders remain worried over further tightening from the PBoC. Chinese equities opened higher, but have since pulled to session lows as the PboC's Governor Zhou re-ignited monetary tightening and inflation fears. Shares of China's largest property developer Vanke are higher for the 2nd consecutive session, following strong results in the latest Hong Kong government land auction.

    - Japanese Tertiary Sector Index rises for the first time in 3mnths: (JP JAN TERTIARY INDUSTRY INDEX MOM: 1.6% V 1.1% expected). The data also showed signs of improving consumption, as the wholesale/retail component came in +2.2% in February after a drop of -0.5% in January. The service industries tracked by the tertiary index produce about 60% of Japan's entire economic output.

    - PBoC governor Zhou reiterates concern over inflation: Zhou reiterated that inflation is too high in China (similar to comments made in Chinese press on Wednesday) and he added the PBoC will take appropriate action. Zhou also said that China has many levels of interest rates to use and many policy tools to control credits.

    - Top Japanese FX official Watanabe thinks we haven't seen the worse of the carry trade: Watanabe said that only some short-term carry trades have been unwound. He added that the unwinding has not been a threat to markets.

    - U.S. subprime worries continue: New York Mortgage Trust (NTR) says they saw unprecedented loan losses during 2H06, pressure in the mortgage sector validates them leaving the business

    - Commodities: Crude oil is trading sharply lower in Asian trading and below the $57.50 level, tracking the losses on equities. Several analysts suggest that we may have hit an interim top in crude prices until we get signs of summertime demand. Spot gold continues to be sold as equities lose value. Shanghai copper is higher by 3.2% and for the 2nd consecutive session, following a fall in Chinese copper output. COMEX copper closed at its highest point since December 19.
     

  2. nikkei dwn 50 pts ooo look out below! :)