Asian Session: TARP weighs on global sentiment, Asian stocks; commodities, financials and techs down

Market Brief

The Yen gave back to the dollar slightly from its momentary low of 95.29 – levels we haven’t seen since the mid 90’s (low of 90.96 seen on October 24 – not seen since 1995). The dollar continued to rise against other currencies despite gloomy news from wall-street and the FED. The Euro giving 1% to the dollar in Asian trading. Cable slumped a further 150pips from the morning’s highs of 1.4973. The U.S Dollar continues to defy it’s current domestic woes as repatriation and risk aversion remain notable bull signals for the currency.

The Fed announced a reevaluation of the $700Bn TARP (Troubled Asset Relief Program), saying it would no longer use the program to buy illiquid mortgage or “toxic” assets like was originally planned but would refocus the aid on the consumer and initiate a consumer loan backed security purchasing program. This news was a significant blow to the semblance of improvement in general sentiment regarding the credit crisis. As a result, U.S indices fell an average of 5% at yesterday’s close – acting as a lead weight to Asia’s opening this morning – the Nikkei down 5.2%, Hang Seng down 5.9% and the ASX down 5.8%. The only index bucking the trend was the Shanghai composite, up 3.6% - continuing to ride the wave of the $500Bn stimulus package announced at week beginning.

Japan announced it’s intention to offer $106Bn to the IMF in a bid to help it aid emerging economies through these difficult times. While the IMF hasn’t explicitly asked for help, many feel the crisis will continue for some time. Deflation rather than inflation is becoming of increasing concern around the globe as weakening demand for goods, services and commodities continues. The crisis continues to push developed economies towards recession.

Commodities fall sharply this morning as continued slow demand forces the EIA to revise its forecasts and anticipate global demand for crude oil to fall by 0.69mln bpd in Q4’08 and 0.9mln bpd in Q1’09. Crude reached a level of $55.03/bbl yesterday, a level not seen since 2005 – energy continues to be the weakest sector in terms of equity performance.

Currency Tech

AUDUSD
R 3: 0.7065
R 2: 0.7015
R 1: 0.6758
CURRENT: 0.6407
S 1: 0.6390
S 2: 0.6339
S 3: 0.6009

EURJPY
R 3: 128.44
R 2: 125.48
R 1:; 123.11
CURRENT: 119.56
S 1: 119.10
S 2: 120.00
S 3: 115.00

USDSGD
R 3: 1.5304
R 2: 1.5161
R 1: 1.5150
CURRENT: 1.5143
S 1: 1.4875
S 2: 1.4772
S 3: 1.4647

• S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot