The Asian markets are trading firm on Wednesday, with participants picking up stocks, shrugging off concerns over the impact of swine flu outbreak on global economy and reports that U.S. banks may have to raise more capital.
The Japanese market is closed today on account of Showa Day. Among the other markets in the Asia-Pacific region, Hong Kong, Singapore, South Korea, Taiwan, Indonesia and Shanghai are trading firm. The New Zealand market is up marginally. Although the mood in the Australian stock market remains extremely cautious and the benchmark Australian indices S&P/ASX 200 and All Ordinaries are currently trading modestly higher.
In the Australian market, consumer discretionary, consumer staples, energy, healthcare, industrials and utilities stocks are trading firm. Materials have rebounded after an early fall. Bank stocks are seen struggling for support.
In South Korea, bank stocks are trading firm. Automobiles have rebounded after a weak start. Technology, airlines and telecommunications stocks are up with notable gains. The Korean benchmark KOSPI is currently trading at 1,325, up 24.31 points over its previous close.
Hong Kong's benchmark index Hang Seng is up 243.10 points or 1.67% at 14,799 at present. The index had declined by around 285 points or 1.92% on Tuesday.
Most of the markets across the Asia-Pacific region had closed sharply lower on Tuesday on renewed worries about the impact of swine flu outbreak on global trade and consumer confidence after the World Health Organization raised its pandemic alert level to the highest level since the warning system was adopted in 2005. Although the flu does seem to be spreading, many doctors agree that the swine flu is no more panic worthy than any other breakout of the human flu during flu season.
On Wall Street, stock prices moved in a choppy fashion on Tuesday. The Dow and Nasdaq ended flat as investors looked for direction amid mixed economic and corporate news. Concerns that the swine flu outbreak may become a pandemic weighed on the markets to a significant extent.
June crude oil opened lower Tuesday morning due to worries that a spreading swine-flu outbreak will curtail travel, and in turn reduce oil demand. However, the futures contracts were able to recoup most of their losses during the session, and closed at $49.92 per barrel, down $0.22 for the session.
In economic news, the report from the Conference Board showed that the consumer confidence index jumped to 39.2 in April from an upwardly revised 26.9 in March. Economists had expected the index to increase to 29.7 from the 26.0 originally reported for the previous month.
Ken Goldstein, an economist at the Conference Board, told RTTNews that the better than expected reading demonstrated that now instead of being very depressed, we're simply just depressed.
Goldstein said, We've started the long climb up from record low levels, but he warned that it's going to be a long, tough and very difficult climb.
Separately, a report from Standard and Poor's showed that the S&P/Case-Shiller 20-City Composite Home Price Index fell at an annual rate of 18.6 percent in February, a modest deceleration from the 19.0 percent drop in prices that was reported for January.
In other news, the Wall Street Journal reported that regulators are pushing Bank of America (BAC) and Citigroup (C) to raise more capital following early results of the government's stress test analysis, generating some concerns about the results of the tests. The Journal said that the capital shortfall amounts to billions of dollars at Bank of America. The report specified that executives at both banks are objecting to the preliminary findings from the government's examination.
Stock markets across the Asia-Pacific region closed considerably lower on Tuesday amid continued concerns about the economic impact of the swine flu outbreak. Japan's benchmark Nikkei 225 Index showed a notable decline, closing down 2.7 percent.
The major European averages also showed notable weakness, although they closed off their intraday lows. The U.K.'s FTSE 100 Index and the French CAC 40 Index both fell 1.7 percent, while the German DAX Index closed down 1.9 percent.
In the U.S., gross domestic product data for the first quarter will be released on Wednesday, headlining a busy day on the economic front. Economists expect the GDP report to show a 4.7 percent decrease in the first quarter following a 6.3 percent decrease in the fourth quarter.
The Federal Reserve also concludes its two-day meeting on Wednesday, with the Federal Open Market Committee due to announce the results of the meeting at about 2:15 pm ET. The Fed is widely expected to leave interest rates unchanged.
Additionally, Burger King is expected to report its quarterly earnings before the bell along with Wyeth, Aetna, General Dynamics and Time Warner.
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