Asian Shares Slightly Lower; Nissan Surges After Results

By Colin Ng

Of DOW JONES NEWSWIRES

SINGAPORE (Dow Jones)--Asian stock markets were trading slightly lower Thursday, weighed by Wall Street's weak finish and as the U.S. Federal Reserve's policy statement provided few fresh cues. In Japan, Nissan Motor was higher after it reported stronger-than-expected results and upgraded its outlook for the year.

The Federal Open Market Committee left its target interest rate unchanged and maintained its language suggesting ultra-low rates would be maintained for an extended period. The result was widely expected, and a slight positive for risk appetite as some investors were worried the Fed's language would be more hawkish.

Still, markets were hobbled by Wall Street's performance. The Dow Jones Industrial Average lost most of its intraday gains in the last half hour of trade and closed up just 0.2%.

"It's been fairly muted here again today, as we saw overseas," said Macquarie Private Wealth associate director Marcus Droga in Sydney. "But the U.S. market closed on a fairly limp note."

Japan's Nikkei 225 was down 1.0%, Australia's S&P/ASX 200 was off 0.4%, South Korea's Kospi Composite was down 1.3% while New Zealand's NZX-50 was down 0.3%. The DJIA futures contract was down 25 points in screen trade.

"This (Fed result) supports our view that the FOMC is not likely to raise rates before the second half of 2010," said Jan Lambregts, head of financial markets research at Rabobank. "The FOMC would not want to repeat the mistake that the Bank of Japan made in August 2000 of lifting the 'zero interest rate policy' prematurely."

Sentiment in the Japanese stock market was partly soured by premarket sell orders from foreign brokerages and a lack of local cues to buy ahead of bellwether Toyota Motor's second quarter earnings due after the market's close. Also, "investors are concerned about limited gains in the U.S. market," said Fujio Ando, senior managing director at Chibagin Asset Management in Tokyo.

Nissan Motor rose 3.0% on better-than-expected second quarter results which were released after the market closed Wednesday. The company reported a 65% drop in net profit to Y25.53 billion for the July-September period and raised its forecast for the full year, becoming the latest Japanese car maker to upgrade its outlook.

Paper and pulp shares were lower on concerns over higher material costs amid stronger crude oil prices recently; Nippon Paper Group was down 1.4%, while recent gold price strength helped trading houses with Mitsubishi Corp. up 1.9%

In Korea, "some investors seem to think yesterday's technical rebound might have been overdone, so they seem to have decided to lock in profits" early in the session, said Lee Kyung-soo at Taurus Investment & Securities.

Doosan Heavy was down 4.4% and Doosan Infracore lost 2.5% after reporting disappointing third-quarter earnings Wednesday.

In Australia, banks were mostly higher despite falls for their U.S. peers. Westpac was up 0.8% after Macquarie Equities upgraded the stock to Outperform, while Commonwealth Bank gained 1.0% after it borrowed EUR1.5 billion via seven-year notes in Europe, indicating investors had the confidence to buy longer-dated debt from the bank without a government guarantee. ANZ Bank was a major drag on the market, and was down 2.6% as the stock went ex-dividend.

Retailer David Jones was down 1.1% after reporting sales figures. It said sales for the fiscal first quarter rose to A$452.1 million, which was up 2.2%, or 0.8% on a like-for-like basis. Some in the market, including JPMorgan, had been factoring in a better result, though David Jones said the performance was stronger than it had anticipated.

In New Zealand, Telecom was up 0.4% ahead of its fiscal first quarter results. PGG Wrightson rose 3.3% with its recapitalization expected this week.

Foreign exchange markets were looking past the Fed statement and focussed on monetary policy meetings for from the European Central Bank and the Bank of England, ending later in the global day as well as U.S. jobs data Friday.

The U.S. dollar was at Y90.53 from Y90.81 in late New York trade Wednesday, while the euro was at $1.4836 from $1.4872 and Y134.37 from Y134.92.

The FOMC statement was a cue for markets to take on more risk, said RBC Capital Markets in a note. "Though there are still some indications that the risk backdrop remains dicier than it has in months, such concerns have been steam-rolled by a rally in risk and a renewed spell of aversion to the U.S. dollar linked to the fact that the Fed will continue to leave the pedal to the metal 'for an extended period.'"

The lead Japanese government bond futures contract was lower, tracking weakness in U.S. Treasurys Wednesday. It was down 0.09 at 137.87 points while the yield on the benchmark 10-year cash JGB was yet untraded after ending Wednesday at 1.395%.

The Nymex December oil futures contract was down 24 cents at $80.16 per barrel, after settling 80 cents higher Wednesday.

Spot gold was at $1,090.95 per troy ounce, down 95 cents from the New York close.

-Colin Ng, Dow Jones Newswires; +65-6415-4140; colin.ng@dowjones.com

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(END) Dow Jones Newswires

November 04, 2009 20:10 ET (01:10 GMT)


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