Asian Markets Trade Mixed Ahead Of Fed Meeting

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9/10/2012 12:30 AM ET

Asian stock markets are trading mixed on Monday as investors treaded cautiously ahead of a U.S. Federal Reserve meeting later in the week. Weak U.S. jobs data released on Friday has raised hopes that the Federal Reserve will announce fresh stimulus at its two-day policy meeting set to commence on Wednesday.

Meanwhile, China released a mixed batch of data over the weekend, with inflation accelerating from a 30-month low in August, reducing possibilities of another monetary easing - while weaker-than-expected industrial output growth put pressure for more stimulus.

The Japanese market is trading lower on the back of a stronger yen and lower than expected GDP data for the second quarter.

In late morning trades, the benchmark Nikkei 225 Index was down 30.31 points or 0.34 percent to 8,841.34.

Stocks from the foods, rubber products and pharmaceutical sectors are trading lower, while gainers include shares from the pulp and paper, oil and coal products, and air transport sectors.

Among exporters and precision instrument makers, TDK is down 2.86 percent and Tokyo Electron is trading lower by 3.07 percent. Canon Inc. (CAJ: Quote) is trading lower by 1.51 percent.

However, Komatsu is adding 2.32 percent and Hitachi Construction Machinery is gaining 2.58 percent.

Among automakers, Toyota Motor (TM: Quote) is down 0.16 percent and Nissan Motor is trading lower by 0.27 percent. Honda Motor (HMC: Quote) is adding 0.08 percent and Suzuki Motor is advancing 0.28 percent.

Shares of Seven & I Holdings Co. is gaining more than 1 percent after the Nikkei business daily reported that in 2015, the company plans to halve the number of staff at its supermarkets run by Ito-Yokado Co. from the current 8,600 workers. The company reportedly plans to cut labor costs by 10 billion yen in that year.

On the economic front, Japan's gross domestic product added 0.2 percent in the second quarter of 2012 compared to the previous three months, the Cabinet Office said on Monday in a final reading. That was down from last month's preliminary reading of 0.3 percent, and it was significantly lower than the 1.2 percent gain in the first quarter.

On a yearly basis, GDP was up 0.7 percent - cut in half from the preliminary reading that showed a 1.4 percent increase, and missing forecasts for a slide to 1.0 percent. GDP had surged 4.7 percent in the previous three months.

According to the Ministry of Finance, Japan posted a current account surplus of 625.4 billion yen in July, down 40.6 percent on year. The headline figure blew away forecasts for a surplus of 485.6 billion yen and an annual decline of 52.0 percent. That follows the 433.3 billion yen surplus and the 19.6 percent annual contraction in June.

The trade balance came in at a deficit of 373.6 billion versus forecasts for a shortfall of 439.5 billion after posting a surplus of 112.0 billion in June.

Exports were down 7.4 percent on year to 5.118 trillion yen, accelerating from the 1.5 percent annual contraction in June. Imports collected 1.9 percent on year to 5.491 trillion yen after easing an annual 1.2 percent in the previous month.

Overall bank lending in Japan was up 1.1 percent on year in August, the Bank of Japan said on Monday, coming in at 396.432 trillion. That was in line with expectations following the downwardly revised 0.9 percent annual increase in July - which was originally pegged at 1.0 percent higher.

In the currency market, the U.S. dollar is trading at the lower 78 yen range on Monday. In late morning trades, the dollar is trading at 78.22-78.26 yen, down 0.70 yen from Friday's close of 78.92-78.94 yen in Tokyo.

The Australian market opened slightly higher on hopes that the Federal Reserve will announce measures to stimulate the U.S. economy following the release of weaker-than-expected weak jobs data for the month of August. However, the market has since pared gains and is now trading flat.

In late morning trades, the benchmark S&P/ASX 200 Index was down 0.60 points or 0.01 percent to 4,325.20, while the broader All ordinaries Index was up 0.60 or 0.01 percent to 4,349.80.

Iron ore miners are trading higher after a bounce in Chinese iron ore spot prices on Friday. Rio Tinto (RIO: Quote,RIO.L) is advancing 3.56 percent, BHP Billiton (BHP: Quote,BBL: Quote) is adding 1.28 percent and Fortescue Metals is gaining 3.5 percent.

Gold miners are gaining on higher prices of the metal. Newcrest Mining is gaining 3.85 percent.

However, the major banks were trading generally trading flat to slightly lower. Commonwealth Bank is down 0.27 percent, Westpac (WBK: Quote) is trading lower by 0.34 percent and ANZ Bank (ANZ: Quote) is down 0.02 percent. National Australia Bank is trading unchanged.

Bendigo and Adelaide Bank's executives had their bonuses scrapped in the 2011/2012 financial year as the bank's net profit dropped by 43 percent. The bank made a net profit of A$195 million in the 12 months to June 30, down from A$342 million in the previous corresponding period. The company's shares are trading lower by 1.19 percent.

Shares of Boral are down 0.58 percent after the building materials maker said it has ended a global search for a new chief executive with an internal appointment. The company said that the president of its U.S. division, Mike Kane, will take over at the helm of the company from October 1.

Xstrata Coal will cut 600 employee and contractor jobs as it deals with the twin challenges of a sharp fall in coal prices and a strong Australian dollar. The move comes even as its parent company U.K.-listed Xstrata plc (XTA.L,XSRAY.PK,XSRAF.PK) is battling to take over commodities trader Glencore International Plc (GLEN.L,GLNCY.PK,GLCNF.PK) in one of the largest mergers of the year.

On the economic front, Australia housing finance commitments for owner occupied housing declined 1 percent month-on-month on a seasonally adjusted basis in July, the Australian Bureau of Statistics said Monday.

Forecasts centered around a flat outcome. The number of loans extended to purchase of new dwellings fell 6.8 percent on a monthly basis. The value of investment-housing loans fell 2.7 percent from June.

In the currency market, the Australian dollar was trading higher against the U.S. dollar on weak U.S. job numbers and action from the European Central Bank. The dollar was trading at US$1.0397, up from Friday's close of US$1.0323.

Among other markets in the region, Singapore, New Zealand, Hong Kong, Shanghai and Taiwan are trading marginally higher, while South Korea, Indonesia and Malaysia are trading in negative territory.

On Wall Street, stocks showed a lack of direction throughout the trading day on Friday, largely holding on to the substantial gains posted in the previous session. The choppy trading came as traders digested a disappointing jobs report.

The Dow edged up 14.64 points or 0.1 percent to finish at 13,306.64, the Nasdaq inched up 0.61 points or less than a tenth of a percent to end at 3,136.42 and the S&P 500 rose 5.80 points or 0.4 percent to close at 1,437.92.

The major European bourses also ended Friday's trading higher. The DAX of Germany climbed by 0.66 percent and the CAC 40 of France gained 0.26 percent. The FTSE 100 of the U.K. rose by 0.30 percent and the SMI of Switzerland finished up by 0.14 percent.

U.S. crude oil ended higher Friday, after some disappointing jobs data from the U.S. raised expectations of additional quantitative easing forthcoming earlier than expected, with the Federal Reserve policy meet coming up next week. Crude for October delivery gained $0.89 or 0.9 percent to close at $96.42 a barrel on the New York Mercantile Exchange on Friday.