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Asia Market Update

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Record oil prices drive Asian stocks lower

Fri, Jun 27 2008, 07:34 GMT
by Trade The News Staff

TradeTheNews.com

- Economic Data: In Q1, New Zealand's GDP contracted (Q1 GDP QOQ: -0.3% V -0.3%E; YOY: 1.9% V 2.0%E), while the May Trade Balance reading was much worse than expected (MAY TRADE BALANCE: - 196M V 150.0ME). The data initially drove the NZD to session lows, but the NZD is currently gaining as the NZ government had already alluded to a possible negative GDP reading. In Japanese inflation data, May CPI had its largest rise in 10 years (MAY NATIONAL CPI: 1.3% V 1.3%E; CORE: 1.5% V 1. 4%E). In terms of Japanese consumer data May household spending was worse than expected (MAY HOUSEHOLD SPENDING YOY: -3.2% V -2.0%E), while retail sales were better than expected (MAY RETAIL TRADE YOY: 0.2% V 0.0%E; MOM: - 0.2% V -0.5%E). Japan's employment data was largely inline with estimates (MAY JOBLESS RATE: 4.0% V 4.0%E; JOB-TO-APPLICANT RATIO: 0.92 V 0.92E). In the Japanese corporate sector, May preliminary industrial production rose by 2.9% m/m, which was above the 2.7% expectation, while the y/y figure was inline.

- Forex: The USD is firmer against the EUR, GBP, CHF and JPY on short covering. During the US session the dollar fell sharply. In terms of the yen pairs, EUR/JPY, GBP/JPY ,CHF/JPY, NZD/JPY and AUD/JPY are all higher. The AUD and NZD are both gaining against the USD, while AUD/NZD is lower.

- Asian Equities: The Nikkei 225 is lower by more than 1. 8% on declines in shares of exporters and banks. The S&P ASX 200 is lower by more than 1.4%, led by losses in shares of banks and BHP. The Kospi is lower by more than 1.75% on declines in shares of Samsung Electronics. Chinese equities are lower by more than 4%, led by declines in shares of airlines and oil companies. The Hang Seng is lower by more than 2%, tracking the declines in Shanghai.

- Commodities: Crude oil prices are lower by more than 0.35% (trading around $139.00/bbl) on profit taking. During the US session crude rose to a new record high of $140/bbl and closed the session up more than 3.5%. After the close of the US trading session, the US House approved a bill which allows the CFTC to use its emergency powers to deal with energy market speculation. It appears that the measure is initially have a muted impact on Asian oil trading, as the measure still needs to pass through the Senate. Also, there is the possibility that President Bush will veto the measure. Spot Gold is lower by more than 0.10% (trading around $913.80/oz) on profit-taking due to the rebound in the USD.

Published on  Fri, Jun 27 2008, 07:35 GMT