RTTNews - Asian market are trading sharply lower on Tuesday amid fresh concerns over the state of the global economy after a report from the New York Federal Reserve revealed a faster pace of deterioration of the U.S. factory sector. Investors across the globe now appear to be nursing concerns over the tremendous pace at which stock markets rallied over the past few weeks in anticipation of a global economic revival.
The Australian benchmark S&P/ASX 200 is currently down by 60 points at 3,972. The broader All Ordinaries index is trading lower by 62.5 points at 3968.
Energy, materials and bank stocks are seen trading sharply lower in the Australian market. Industrials, utilities and consumer discretionary stocks are also exhibiting weakness. A few stocks from healthcare, technology and telecom sectors have bucked the trend and are trading firm.
In company news, Panax Geothermal Limited has launched a placement to institutional and sophisticated investors and a 1 for 4 accelerated non-renounceable entitlement offer to raise approximately A$9.3 million. The company will utilize the proceeds of the equity rising to fund the drilling of the Salamander-1 well at the Penola Project in South Australia, as well as for its working capital requirements. The Panax Geothermal stock is in a trading halt today.
In economic news, the New South Wales and Queensland governments are scheduled to present their budgets for 2009-10 today. Treasurers of the two state are likely to hand down big-spending Budgets that is expected to leave their states billions of dollars in deficit. While the NSW's budget is expected to have a bottom line A$1.3 billion in the red, the Queensland's deficit after the budget is likely to stay around the already forecast A$ 1.57 billion.
In Tokyo, the Bank of Japan has upgraded its assessment of the Japanese economy for the second straight month given recent signs of improvement. At a two-day policy meeting, the BOJ's eight-member Policy Board voted unanimously to keep the key interest rate steady at 0.1 percent. The central bank last cut its target rate for unsecured overnight call money in December, lowering the rate from 0.3 percent. The upgrading of the economic assessment came after the central bank last month raised its assessment of the nation's economy for the first time in two years and 10 months.
However, the Japanese market, which opened on a weak note on negative cues from Wall Street and plunged deeper subsequently on across-the-board selling, is still down in the red with its benchmark Nikkei losing as much as 260 points or 2.58% at 9,780.
Automobile stocks are mostly down with sharp losses. Almost all banking and retail majors are down in the red. Stocks from insurance, real estate, communications and services sectors are also exhibiting weakness. And there are not many gainers from construction, chemicals, foods, pharma, steel, non-ferrous and machinery sectors either.
Electric power stocks Tokyo Electric Power, Chubu Electric Power and Kansai Electric Power have bucked the trend and are trading firm with sharp gains.
Shikoku Coca-Cola Bottling has risen sharply following an announcement from Nippon Paper Group Inc. that it will make the firm its wholly owned subsidiary on October 1 this year. The papermaker will give 0.39 share for each share in Shikoku Coca-Cola Bottling, meaning that the bottler's stock is seen worth about 992 yen. Investors moved to snap up this arbitrage opportunity, sending Shikoku Coca-Cola Bottling's shares higher. The stock is currently trading 89 yen up at 960.
Shares of Iida Home Max Co. are bid-only since this morning following the homebuilder coming out with a bullish forecast for the year ending April 2010. The company has said that it will likely book a group net profit of 3.7 billion yen in the year ending April 2010, up 4.7 fold from fiscal 2008.
The Korean benchmark KOSPI, which bounced back from its earlier low, has faltered again on a fresh round of selling in afternoon trading and is currently trading 15 points down at 1,397. Technology and oil stocks are among the prominent losers. Bank stocks have drifted lower after showing displaying some strength.
Among other markets in the Asia-Pacific region, Hong Kong is down sharply in the red. The Hang Seng index is down by as much as 3.2%. The Indonesian benchmark Jakarta Composite is down by nearly 3.5%.
The Strait Times index of the Singapore market is trading 2.1% down. Shanghai, New Zealand and Taiwan are also trading in the red with notable losses.
Stock markets across the Asia-Pacific region had closed mostly lower on Monday, as traders cashed in on recent gains. And the trend was not any different in other markets across the globe.
On Wall Street, stock prices fell sharply with traders going on a profit-taking spree. A report from the New York Federal Reserve that showed conditions for New York manufacturers deteriorated at a faster pace in the month of June than in the previous month played a key role in prompting investors to go for the sell button.
The Dow closed down 187 points or 2.1 percent at 8,612, the Nasdaq closed down 42.42 points or 2.3 percent at 1,816.38 and the S&P 500 closed down 22.49 points or 2.4 percent at 924.
Major European markets also saw considerable weakness, with the U.K.'s FTSE 100 Index ending the session down 2.6 percent, while the French CAC 40 Index and the German DAX Index fell 3.2 percent and 3.5 percent, respectively.
With data on U.S. housing starts, inflation and industrial production to come out today, the mood across the globe is likely to remain cautious.
Crude oil dropped on Monday on profit taking and a stronger dollar. Light sweet crude oil fell to $70.62, down $1.42 for the session. Earlier, oil hit as low as $69.58.
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