Asian Market Commentary
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Asian Markets Recover After Weak Start

Asian stock markets are mostly trading in positive territory on Tuesday with a section of investors indulging in some bargain hunting after recent losses. The mood, however, remains quite cautious in the region following a weak lead from the U.S. and European markets, where stocks ended lower overnight amid lingering worries about the global economy.

After a weak start, the Australian stock market is edging higher with investors indulging in some selective buying in consumer staples, financial, healthcare and property trust stocks.

The benchmark S&P/ASX 200 index, which declined to 4,337.7 in early trades, is currently trading at 4,365.7, up 13.3 points or 0.3 percent from its previous close. The broader All Ordinaries index is up 9 points or 0.2 percent at 4,439.3, nearly 25 points off the day's low of 4,415.5.

Wesfarmers Limited shares are up more than 2 percent. The company said Coles sales rose almost five percent to A$7.8 billion in the third quarter. However, tough trading conditions led to a 4.4 percent fall in Target sales to A$692 million from the year-ago period.

Stockland is trading 2.7 percent up. Toll Holdings, Westfield Retail Trust, Suncorp Group, Tatts Group, CSR, APA Group, GPT Group, Qantas Airways, Sonic Healthcare, Brambles, James Hardie Industries, Westpac Banking Corporation, Westfield Group and Duet Group are also trading notably higher.

Paladin Energy shares are down as much as 6.5 percent after the company made about an announcement about the successful raising of US$274 million through convertible nonds.

Newcrest Mining is down with a loss of around 4 percent following the company cutting its forecasts for gold and copper production for 2012 after carrying out a major review of its operations.

Newcrest said gold production for the 2012 financial year would be reduced to 2.25-2.35 million ounces compared to the prior forecast of 2.43-2.55 million ounces. It also lowered its forecast for copper production to 70,000-75,000 tonnes from the prior forecast for 75,000-80,000 tonnes.

Onesteel, Beach Energy, Fortescue Metals, Iluka Resources, Lynas Corporation, Aquarius Platinum and Orica are also trading weak.

On the economic front, consumer prices in Australia were up 1.6 percent on year in the first quarter of 2012, the Reserve Bank of Australia said on Tuesday - well below estimates for 2.2 percent after showing 3.1 percent in the fourth quarter of 2011.

The weaker than expected showing all but guarantees that the RBA will hike interest rates from the current 4.25 percent at next week's monetary policy meeting.

On a quarterly basis, inflation added just 0.1 percent - also below forecasts for 0.6 percent increase following the flat reading in the previous three months.

The RBA trimmed mean was up 2.2 percent on year and 0.3 percent on quarter. These also missed forecasts following the 2.6 percent annual increase and the 0.6 percent quarterly gain in Q4.

The RBA weighted median was up 2.1 percent on year and 0.4 percent on quarter after coming in higher by 2.6 percent on year and 0.5 percent on quarter in the fourth quarter.

The Japanese stock market started off on a negative note on Tuesday, extending its losses for a fourth successive session, following a weak lead from Wall Street and European markets. However, with a few blue chip stocks finding support at lower levels, the market regained some lost ground subsequently.

Financial, real estate, insurance and communications stocks opened on a weak note and were mostly trading in negative territory when the morning session ended. Transport, oil and chemicals stocks traded mixed.

The benchmark Nikkei 225 index, which declined to 9,457 in early trades, was down 35.4 points or 0.4 percent at 9,506.8 at the end of the morning session.

JGC Corp, down 3.5 percent, was the most prominent loser in the Nikkei index. Konica Minolta Holdings, T&D Holdings, Pacific Metals, Hitachi, Sumitomo Chemicals, Nomura Holdings and Sony Financial Holdings were down 2 to 3 percent.

Among automobile stocks, Hino Motors, Isuzu Motors, Nissan Motor and Mitsubishi Motors lost 1 to 2 percent.

In the banking space, Sumitomo Mitsui Financial Group, Bank of Yokohama, Shinsei Bank, Shizuoka Bank, Aozora Bank and Mitsubishi UFJ Financial were down with notable losses.

Advantest Corp. shares gained nearly 5.5 percent. All Nippon Airways, Sumco Corp, Nippon Electric Glass, Japan Tobacco, Nippon Sheet Glass, Fujikura, Fujifilm Holdings Corp, Alps Electric and Mitsui Engineering & Shipbuilding moved up by 1 to 3.5 percent.

On the economic front, an index measuring corporate service prices in Japan was down 0.3 percent on year in March, standing at 96.4, the Bank of Japan said on Tuesday. That beat forecasts for a contraction of 0.6 percent, which would have been unchanged from the February reading. On month, the index was higher by 0.7 percent after adding 0.1 percent in the previous month.

For the first quarter of 2012, prices were down 0.4 percent on year 95.9 after shedding 0.2 percent in the previous three months. Prices also fell 0.3 percent on quarter following the revised 0.1 percent increase in Q4.

In the currency market, the U.S. dollar traded in the lower 81 yen range in early deals in Tokyo. The yen is currently trading at 81.10 to the U.S. dollar.

Among other markets in the Asia-Pacific region, Shanghai, Hong Kong, Indonesia, Singapore and Taiwan are trading higher, while Malaysia and South Korea are trading marginally down. Markets across the region ended mostly lower on Monday.

On Wall Street, stocks saw considerable weakness on Monday, hurt by disappointing economic data from overseas, including a report from HSBC Holdings and Markit Economics showing a continued contraction in Chinese manufacturing activity in the month of April.

However, the major averages ended the session well off their lowest levels of the day. The Dow closed down 102.1 points or 0.8 percent at 12,927.2, the Nasdaq drifted down 30 points or 1 percent to 2,970.5 and the S&P 500 ended lower by 11.6 points or 0.8 percent at 1,366.9.

Major European markets too ended weak on Monday. While the U.K.'s FTSE 100 index lost 1.9 percent, the French CAC 40 index and the German DAX index plummeted by 2.8 percent and 3.4 percent, respectively.

U.S. crude oil futures settled lower Monday, as investors weighed some significant developments in France and the Netherlands that once again rekindled concerns over the Eurozone sovereign debt and oil demand.

Crude for June delivery dropped $0.77 or 0.7 percent to close at $103.11 a barrel on the New York Mercantile Exchange.

by RTT Staff Writer

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