Asian Markets, Fundamentals

Asian Stock Markets Slump Ahead of U.S. Job Report With Commodity Prices Falling Further

Asia Session Key Developments

• Crude oil prices slip to $67/bbl
• Japan’s Economy and Fiscal Policy Minister continues to see risks for deflation

Stocks in Asia/Pacific traded slightly lower on Wednesday, with the Hang Seng dropping 200.68 points on the back of lower commodity prices. Meanwhile, the new Economy and Fiscal Policy Minister of Japan said that he wants to prevent deflation as Japan adjusts to falling output and widening trade deficit. During a news interview, Yoshimasa Hayashi said “Japan may slip back into deflation if the strength of the recovery is weak and the output gap keeps falling. We don’t deflation to become the main scenario.” Asian prices were mostly dragged down as oil prices slipped below $70 a barrel, with the overall market slipping lower ahead of the U.S. non-farm payrolls release.

NKY 225                                           9876.15

Japanese stocks traded lower today ahead of the U.S. job report, while lower commodity prices weighed on the overall market . At the same time, basic materials and telecommunications tipped higher, with Tokai Carbon and KDDI Corp leading the sectors higher. The Nikkei fell 63.78 points (0.64%) to end the day at 9876.15 in Tokyo, led by a 1.63% drop in oil & gas , with shares of Nippon Light Metal Co. slipping 5.45%. In addition, financials slipped 1.38%, with Shinsei Bank tumbling 5.10% following reports saying that the firm would merge with fellow troubled bank Aozora in 2010.

HSI                                                         18178.05

The Hang Seng closed down 200.68 points (1.09%) to end the trading session at 18,178.05, driven by falling oil prices. Ping An Insurance led the market higher, with shares rising 3.34% on the day after they were upgraded to ‘buy,’ while China Unicom lost 3.41% after they announced an agreement with the government of Guangxi Autonomous Region to spend RMB 10 million in the region to upgrade the telecommunications industry. Industrials led the decline, with the sector down 2.60% as commodity prices continue to decline, while Cnooc Ltd lost 1.77% as oil prices slipped below $70/bbl.

ASX 200                                            3877.30

The ASX stayed relatively unchanged throughout the session, but ended the day at 3877.30 after gaining just 3.30 points (0.09%). Utilities led the market lower, with the sector losing 1.65%, while basic materials and consumer goods gained 0.87% and 0.39%, helping to buoy the overall index. Hastings Diversified Utilities Fund slumped 8.9% after they sold A$250 million shares to shore up their capital, while Panoramic Resources rallied 8% after the firm said nickel outputs rose to a record high from the previous year.

Notable Asian Session Event Risk / Economic Releases