Commodity prices moved to the downside, with oil showing weakness ahead of Thursday's OPEC meeting. The oil cartel is most likely to leave production quota unchanged. The dollar's recovery exerted downward pressure on the price of gold, which advanced about 3% last week. Most local currencies showed weakness against the dollar.
Japan's Nikkei 225 average plunged sharply to an intra-day low of 9,232 in early trading before cutting much of its losses and ending down 36.19 points or 0.39% at 9,311. Meanwhile, the Topix Index alternated between gains and losses before ending up 0.77 points or 0.1% at 884.
Among sectors, shipbuilders, chemical companies and electric machinery makers showed notable weakness. Auto, construction, rubber product, food, steel product, pharma and machinery stocks ended on a mixed note. However, utility, communications, oil & coal, real estate, non-ferrous metal, insurance and financial services stocks showed buying interest.
Alps Electric Company, Denki Kagaku, Hino Motors, Mitsubishi Electric, Nippon Paper, Taiheiyo Cement, Teijin, Tokyo Electron, Toyobo and Toyota Tsusho were among the notable decliners. On the other hand, Daikin Industries, Mitsui Mining & Smelter, Nippon Light Metal, Nippon Sheet Glass, Sumitomo Realty and Taisei Corp. advanced strongly.
Ebara ended down 1% after it announced that it is withdrawing from the fuel cell market due to the huge investments involved and margin pressure at its other divisions. Nippon Steel ended modestly lower despite negotiating a price cut in iron ore supplied by Rio Tinto.
On the economic front, a report released by Japan's Finance Ministry showed that Japan's net external assets as at the end of 2008 were down 9.9% year-over-year at 225.51 trillion yen due to the strengthening yen. The Bank of Japan's corporate service price index report for April showed a 0.2% monthly drop and a 2.4% year-over-year decline. Annually, prices have shown a negative trend since October 2008.
Australia's All Ordinaries recovered from its early morning weakness and staged a steady advance before closing up 46.30 points or 1.24% at 3,782. The S&P/ASX 200 closed at 3788, up 50.5 points.
Material stocks led the turnaround, with financial, industrial, energy, consumer staple and REITs also lending support to the markets. Utilities and healthcare stocks came under selling pressure.
Heavily weighted ANZ, Commonwealth Bank, National Australia Bank and Westpac advanced after showing indecision in early trading. However, insurers moved to the downside. Notwithstanding the 33%-44% price cuts in iron ore conceded by Rio Tinto to Nippon Steel, the former rose sharply, while peers BHP Billiton, Zinifex, Newcrest Mining and Lihir Gold also advanced. Analysts attribute the positive sentiment towards Rio Tinto to the price cuts, which were lesser than what the markets had discounted.
South Korea's Kospi surrendered the modest gain it notched up earlier in the day and remained below the unchanged line for the bulk of the session. The index dipped as much as 39.32 points in late trading before cutting some of its losses to end down 28.86 points or 2.06% at 1,372.
The index closed lower for a fourth straight session, as traders continued to take profits following the index scaling its highest level since early October 2008 last week. Traders used the North Korean missile tests threat and South Korea's decision to become a member of the U.S.-led Proliferation Security Initiative to stop illicit trade in nuclear arsenals as excuses to liquidate holdings. The Korean won also slid more than a percent.
Heavily weighted Samsung Electronics fell 1.2%, as institutional investors dumped the stock. Shipbuilders and financial stocks also came under significant selling pressure. Hyundai Heavy Industries fell on rumors that it is willing to make an offer for Hynix Semiconductor.
Hong Kong's Hang Seng Index, which opened lower and reversed course in the morning and saw some early gains, saw the buying interest fade away. After staying close to the unchanged line in the mid-session, the index retreated decisively into negative territory in the afternoon to close down 130.26 points or 0.76% at 16,992.
Financial stocks ended mostly lower, with index heavyweight HSBC Holdings leading the slide with an over 1% decline. China Mobile, another heavyweight, fell 1.18%. Resource stocks Chalco, CNOOC, PetroChina and Sinopec also declined. On the other hand, property stocks ended mostly higher and Cosco Pacific rallied about 8%.
India's Sensex showed a lot of indecision in the morning, moving back and forth across the unchanged line, before selling pressure stepped up, pushing the index deep into negative territory. The index has trimmed some of the losses since late afternoon and is trading at 13,627, down 286.33 points or 2.06%. The market is seeing a broad based sell-off, with realty stocks leading the slide. However, technology stocks are showing some resistance, partly in reaction to the retreat in the value of the rupee versus the dollar.
Among the other markets in the region, China's Shanghai Composite Index had a roller-coaster ride before closing down 21.43 points or 0.82% at 2,589, Indonesian Composite Index receded 29.11 points or 1.54% to 1,858, the New Zealand NZ 50 Index ended at 2,734, down 6.12 points or 0.22%, and Singaporean Straits Times Index lost 29.14 points or 1.29% at 2,237.
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