Asian Markets, Fundamentals

Stocks in Asia/Pacific Mixed on Monday, Japan’s Prime Minister Holds Caution Outlook

Asia Session Key Developments

• Australian Producer Prices Mark Slowest Growth on Record
• Japan Prime Minister Yukio Hatoyama Says Economic Recovery is Unpredictable

Stocks in Asia/Pacific were mixed on Monday, while Japanese stocks advanced for the second day led by better-than-expected earnings reports among automakers and consumer companies, while commodity prices continued to lose ground to weigh on the markets.  Meanwhile, Japan’s Prime Minister Yukio Hatoyama said the economic recovery is unpredictable and held a weakened outlook for the labor market as businesses continue to scale back on production and employment, and pledged to support economic activity as policy makers continue to see a risk for a protracted recovery. At the same time, the economic docket showed producer price in Australia increased 0.1% in the third quarter amid expectations of 0.3% rise, while the annualized rate slipped to 0.2% from 2.1% in the three-months through June, and the slump in price growth may hamper the prospects for a rate hike as policy makers hold a dovish outlook for near-term inflation.

Nikkei 225                          10,362.62

The Japanese equities market traded higher for a second day on Monday, with the Nikkei 225 gaining 79.63 points (0.77%) to close at 10,362.62, led by a 1.64% rise in consumer goods. Shares of Chiyoda Corp plunged 12.56% to mark its largest decline since November of 2008 as the company lowered its full-year net income outlook by 60% because of project delays, while Nippon Express climbed 10.40% to post the sharpest rise since January of 2000 subsequent to the company slashing its stake in the Japan Post Holding venture. Merrill Lynch & Co also aided to the rise of Nippon on Monday as they raised the rating of Nippon Express from “underperform” to “neutral.” At the same time Honda Motors advanced 3.39% after the Nikkei English news said the firm will spend more than JPY 10B to increase production of motorcycles and scooters by 20% in Indonesia, while Kawasaki Heavy Industries surged 4.35% as the Nikkei newspaper said the firm will receive licensing fees from a China-based company that uses its technology, who recently won a JPY 600B bid for high-speed railcars.

Hang Seng

Closed in observance of the Cheung Yeung Festival

S&P/ASX 200 Index           4,830.30

Stocks in Australia traded lower on Monday on the back of lower commodity prices, causing the S&P/ASX 200 to fall 29.10 points (0.60%) to end at 4,830.30, with technology shedding 2.63% to lead the decline. Shares of Woodside Petroleum dropped 1.83% as oil prices weakened for the third day paired, with the Royal Bank of Scotland cutting the stock rating from “hold” to sell, while Australand Property Group increased 4.55% as the firm held an improved outlook for 2009 operating profits . Meanwhile, Billabong International slipped 4.37% after Goldman Sachs cut the rating on the stock from “hold” to “buy,” while Felix Resources advanced 4.00% after Australia’s Foreign Investment Review Board approved Yanzhou Coal Mining’s bid for the firm.

Notable Asian Session Event Risk / Economic Releases