RTTNews - Mixed trading was witnessed among the major markets across the Asia-Pacific region, taking cues from the Wall Street, where the major indices ended mixed on Friday on concerns about the pace of recovery in the economy. While traders welcomed the sharp decline in number of jobs lost during May, the rise in unemployment rate to 9.4%, the highest level since August 1983, has raised fresh concerns about the pace as well as magnitude of economic recovery. The market in Japan and China ended in positive territory, while market in Hong Kong, Indonesia, South Korea, Singapore, Jakarta and Taiwan ended in the negative territory. The market in Australia was shut for a public holiday. The stock market in India is also trading in the negative territory, on weak global cues.
Friday, in the U.S, the much-awaited report from Labor Department showed that non-farm payroll employment fell by 345,000 jobs in May, following a revised decrease of 504,000 jobs in April. Economists had expected a decrease of about 520,000 jobs compared with the loss of 539,000 jobs originally reported for the previous month. At the same time, the report said that the unemployment rate jumped to its highest level of 9.4% percent in May from 8.9% percent in April. Economists were expecting the unemployment rate to rise to 9.2%.
While welcoming the surprise drop in job losses during May 2009, analysts were apprehensive about the rising unemployment rate in the country to the highest level since August 1983 and preferred to exercise more caution before jumping in to any concrete conclusion. The euphoria in the market was tempered on growing concerns about recovery prospects and the major indices ended mixed.
The Dow finished at 8,763, up by 12.89 points or 0.2% , the Nasdaq slipped by 0.60 points or 0.03% to 1,849, and the S&P 500 edged down by 2.37 points or 0.3% to 940.
The Nikkei 225 Average opened sharply higher at 9,829 compared to its previous close of 9,768, on the better than expected U.S. jobs report as well as a weaker local currency which settled down at the mid-98 yen region. However, mixed reaction for the job report in the U.S. capped the gains as traders preferred to adopt a wait-and-watch attitude till clear signals emerge about the direction and pace of global economic recovery. Exporters and automakers led the gains and the market held on to the initial gains, while moving in a narrow range. The index ended at 9,866, with a gain of 97.62 points or 1.00%. The broader Topix Index of all first section issues also edged higher to 927, a gain of 10.33 points, or 1.1%.
On the economic front, the Ministry of Finance , in a preliminary report, said that the nation recorded an unadjusted surplus of 630 billion yen in April, sharply lower than economists' expectation of a surplus of 850 billion yen. The surplus in the current account for March was at 1.485 trillion yen. The current account surplus has been steadily declining month-over-month and the latest decline is the 14th consecutive month of decline. Year-over-year, the current account surplus declined 54.5%. The report further noted that the trade balance fell 69.2% year-over-year to 184.3 billion. Imports declined 37.8% year-on-year to 3.73 trillion yen, while exports dropped 40.6% to 3.915 trillion yen.
Crude oil prices retreated from its high and ended weaker by $1.34 at $67.10 a barrel in Asian trading. Light sweet crude for July delivery closed marginally lower at $68.44 a barrel on Friday in New York on strengthening of the US dollar.
Exporters advanced on a weaker local currency. Canon Inc. advanced 3.38%, Nikon gained 1.77% and Sony Corp. edged up 0.56%.. Komatsu, the second largest manufacturer of construction machinery in the world, surged 5.98% after two brokerages recommended the stock in their research note to the investors on expectations of a pick-up in demand.
Automakers also advanced on the weaker local currency, as they export more than half of their products to other countries. Mazda Motor Co. gained more than 6%, and Toyota Motor advanced 1.30%. A newspaper report revealed that Toyota Motor is contemplating reduction in production costs for smaller cars by as much as 100 billion yen by the year 2012.
Financial stocks ended in positive territory on hopes of positive outlook for the economy. Mitsubishi UFJ gained 3.21%, Mizuho Financial soared 7.47%, Resona Holdings advanced 1.27% and Sumitomo Mitsui surged up 6.38%.
In Hong Kong, the Hang Seng Index opened lower at 18,522 compared to its previous close of 18,680, on concerns about the pace of global economic recovery. Increasing concerns about valuation of the stocks following a sharp rise in the past few trading sessions on the back of a relief rally also influenced the market as traders preferred to take profits and pause for a while awaiting concrete signals about the magnitude and pace of economic recovery. All the index components, except five stocks, ended in negative territory. The index ended with a loss of 426 points, or 2.24%, at 18,253.
Property, financials and china-related stocks ended in negative territory on profit taking and concerns of over-valuation.
In property space, Henderson Land lost 5.18%, SHK Property slipped 5.54%, Hang Lung Property fell 3.27%, Sino Land plunged 6.84%, and New World Development shed 5.43%.
All the financial stocks ended weaker on concerns about the pace and magnitude of global economic recovery. HSBC Holdings shed 2.66%, Hang Seng Bank lost 3.55%, BOC Hong Kong fell 4.24 and Bank of China was down 1.12%.
Among resource stocks, PetroChina lost 2.45% and CNOOC, the largest offshore oil company in China, declined 3.22%. Aluminum Corp. of China, or CHALCO, fell 2.73%.
China-related stocks also ended in negative territory. China Mercantile Holdings declined 6.16% , China Resources lost 3.29% and China Shenhua fell 3.66%.
In South Korea, the benchmark KOSPI Index ended in negative territory on concerns about the pace of global economic recovery. Institutional investors preferred to offload shares of blue-chip companies dragging the index down below the unchanged line amid volatile trading. After marginally weaker at 1,394 compared to previous close at 1,395, the market surged ahead on better than expected job report in the U.S, released on Friday. However, rise in umemployment rate has dampened the spirits and clouded the sentiment with doubts regarding the pace of recovery. The index ended with a loss of 1.41 points, or 0.10%, at 1,393.
All the sectors ended in negative territory on heavy institutional selling. KB Financial Group, the holding company of Kookmin Bank, slipped 2.62%. Woori Finance lost 2.35% and Shinhan Financial Group fell 1.65%..
The country's No. 1 builder, Samsung Construction & Trading lost 0.80%, while top automaker Hyundai Motor fell 4.44%. Kia Motor fell 2.94%.
In India, the stock market ended negative territory, dragged down by metals and commodities. Weak global cues on concerns about global recovery negatively impacted the market.
The BSE Sensex lost 437.63 points or 2.90% to close at 14,66, and the broader Nifty fell 157.00 points, or 3.86%, to close at 4,410..
Among the other major markets in the region, China's Shanghai Composite Index ended higher by 14.44 points or 0.52% at 2,768. However,Taiwan's Weighted Index plunged 3.34%, or 228.72 points, to close at 6,628, Strait Times Index in Singapore lost 62.65 points or 2.61% to close at 2,331, and Indonesia's Jakarta Composite Index fell 22.28 points, or 1.07% to close at 2,057.
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