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Asia Market Update

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Stocks look heavy at the start of the week

Mon, Mar 31 2008, 04:06 GMT
by Eben Esterhuizen

TradeTheNews.com

- Aussie inflationary pressures remain strong: (AU March TD Securities Inflation MoM: 0.4% v 0.3% prior; YoY: 4.0% v 4.0% prior) "Inflation pressure remains strong, driven by solid price rises for some basic household items," said Joshua Williamson, a senior strategist at TD Securities. "Furthermore, underlying inflation jumped in March with the trimmed mean recording the equal highest monthly rise in the history of the inflation gauge." TD Securities said that Australian inflation is showing few if any signs of topping out.

- Japanese industrial output declines for second straight month: (JP FEB PRELIMINARY INDUSTRIAL PRODUCTION MOM: -1.2% V -2.0% expected, -2.2% prior; YOY: 4.2% V 2.9% expected, 2.2% prior) "The reduction in output may reflect a precaution on the part of producers amid growing uncertainty over the global demand outlook," said Lehman in a note to clients. Analysts pointed out that manufacturers' inventories were generally low and exports have held up despite the U.S. slowdown.

- Japanese PMI drops on slowing orders: (JP MARCH NOMURA/JMMA MANUFACTURING PMI: 49.5 V 50.8 prior, first contraction in 5 months; PMI input prices index rises to a new survey high) "The latest survey painted a rather bleak picture, with both output and new orders contracting concurrently for the first time in five months," said Paul Smith, economist at NTC Research. Analysts said today's PMI data shows that the JPY's rapid rise against the dollar this month and heightening concerns over the credit crunch could take a toll on exports in the coming months.

- Rising interest rates is curbing demand for credit in Australia: (AU FEB PRIVATE SECTOR CREDIT MOM: 0.7% V 1.1% expected, 1.1% prior; YOY: 15.5% V 16.2% expected, 16.4% prior) Notably, personal credit fell 0.1% for an annual rate of 10.8%, the slowest annual pace since November 2006.

- New Zealand business confidence drops to a 17yr low: (NZ MARCH NBNZ BUSINESS CONFIDENCE: -57.9 V -43.9 prior; Business Activity: -6.4 v +2.4 prior)

- An increase in full-time workers boosts Japanese labor cash earnings: (JP FEB LABOR CASH EARNINGS YOY: 1.3% V 0.6% expected, 1.0% prior) Analysts said Japanese firms are facing worries about the slowing economy but still want to attract skilled workers by giving them full-time posts. Overtime pay grew by 2.6%, marking the second straight month of increases. The rise in overtime pay was the fastest since November 2006.

- Australia new home sales decline as higher interest rates temper demand (AU FEB HIA NEW HOME SALES MOM: -5.3% V 11.3% prior) "We saw a relatively big lift to sales in January thanks to a strong boost from the resource rich states. However, as suspected this situation has proven to be unsustainable," said HIA's chief economist, Harley Dale.

- Equities: At 23:51 EDT Japan's Nikkei is -1.56%, the S&P/ASX200 is -0.06%, South Korea's KOSPI is -0.19%, and the Shanghai Composite Index is -2.30%. The S&P futures index has gained +0.09%, last trading at 1,320.10. Japanese financials traded lower after Lehman was hit by $355M fraud. Lehman believes the fraud was perpetrated by two employees at Japanese trading house Marubeni Corp, and the fraud may have hit other financial institutions as well. Japanese tech stocks and automakers also started the week in the red. The S&P/ASX200 had a narrowly mixed session, with gains on miners offsetting losses on banks. Shares of Centro Retail traded sharply higher after announcing that it no longer has to guarantee $450M of bonds. South Korea's KOSPI is little changed as gains in shares of chipmakers offset losses in shares of banks. Chinese equities are sharply lower after rumors of government support for markets failed to materialize.

- Commodities: Spot gold gained +0.20% between 18:00 EDT and 0:00 EDT, last trading around $938.40/oz. Crude oil prices lost -0.62%, last trading at $104.96/bbl.  

Published on  Mon, Mar 31 2008, 04:08 GMT