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Asia Market Update

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The Hang Seng and Nikkei lead Asian equities lower

Wed, Oct 8 2008, 07:58 GMT
by Eben Esterhuizen

TradeTheNews.com

Forex: Volatility in FX majors was suspiciously subdued in Wednesday's Asian session in spite of the rout in Far East equity indices. USDJPY was tightly rangebound just above 101 figure, allowing yen crosses to bounce off their recent lows. EURUSD hovers just below the 1.36 handle with the dollar also paring its recent gains against GBP and CHF. Renewed downside in the former appears to be constrained by 1.7430 intraday support while the selloff in the latter remains suspended on approach to USDCHF $1.15 handle. Australian dollar appears to be the outperformer among the majors, finding support at AUD0. 7050 followed by a breach of AUD0.71 against the greenback. AUD is also rising relative to EUR, GBP, JPY, and NZD. Aussie rally is particularly noteworthy in light of poor economic data from Australia that saw a -2.2% decline in monthly home loans and a sharp 11% drop in Westpac Consumer sentiment, as traders remain enthused by the prospects of an impact from a much wider rate cut on the Aussie economy. Over in Asia's emerging markets, South Korean Won is under immense selling pressure with USD/KRW rising above 1,300 - a 7 1/2 year low for the Won. Testimony from South Korea's central bank official revealed efforts to secure loans to raise funds in the face of an ongoing liquidity drain. USDSGD continues to struggle with $1.47 handle while Taiwan dollar was pressued by central bank's warning of an unscheduled policy meeting if conditions demand it.

- Asian Equities: The Nikkei 225 is lower by more than 4.5% and trading below 10, 000. Declines in Tokyo are being led by shares of Toyota Motor, whose shares are declining by more than 6% following an unconfirmed report in the Nikkei news that the company's FY operating profit could decline by 40% versus the prior year. Other decliners in Japan include shares of banks and steel makers. The S&P ASX 200 is declining by more than 4%, despite the RBA's recent larger than expected interest rate cut. Declines in Sydney are being led by financials and miners. The Kospi is off by more than 3%, led by declines in shares of industrials, technology companies and banks. The Shanghai Composite is lower by more than 3%, led by weakness in financial companies. China's largest property developer, Vanke's share are lower by more than 3% on reports that its September sales declined sharply. In other Asian equity trading, the Hang Seng is declining by more than 5.5%, the Taiex is close to 4.3% lower, the Straits Times is lower by close to 4% and the Jakarta Composite is off by more than 9%.

- Commodities: Crude oil prices are lower by more than 1%, tracking the weaker equities. Spot Gold is gaining by more than 0.20%, but is well off of the session's best levels.

Published on  Wed, Oct 8 2008, 07:59 GMT