Asian markets slid lower today, following the bearish economic assessment from the US Fed, which kept its interest rates in their record low range of 0.00% to 0.25% and said they would keep them there for an extended period as expected. The Fed also announced that it would reinvest mortgage bond proceeds into government bonds rather than more mortgage debt, ensuring the start of another round of quantitative easing. While the DOW recovered from intraday lows following this statement and dollar eased, the sentiments turned around drastically today. The dollar approached around two week highs of 1.3030 against the Euro and DOW futures collapsed by more than 100 points, leading to a broad decline in the major stock indices.
Japanese stocks slumped on the prospects of a downbeat US economy and a stronger yen dragged down the export-oriented shares. The benchmark Nikkei 225 Stock Average dropped 258.2 points, or 2.7 percent, to close at 9,292.85 while the broader Topix index was down 20.23 points, or 2.37 percent, at 834.45.
The Bank of Japan kept its assessment of the economy unchanged for a third month, maintaining its view the nation will keep expanding even as the yen advances against the dollar. “Japan's economy shows further signs of a moderate recovery, induced by improvement in overseas conditions,” the central bank said in a monthly report released the central bank said in a monthly report released today in Tokyo, using the same language as yesterday's policy statement.
The bank's policy board yesterday refrained from introducing additional liquidity measures at a rate-setting meeting, where it kept the overnight lending rate at 0.1 percent.
On the economic front, Japan's core private-sector machinery orders rose a seasonally adjusted 1.6 per cent in June to 704 billion yen (8.25 billion dollars), the government said before the market opened Wednesday.
The Australian stocks dropped amid negative global undertone and ended sharply weaker as commodities drifted lower and the investor's continued to book profits after the markets topped out at a six week highs earlier in the week. The benchmark S&P/ASX200 Index corrected by 85.20 points, or 1.88%, and closed at 4,455 points, while the All-Ordinaries Index closed at 4,480, representing a loss of 83.30 points, or 1.83%.
On the economic front, a report released jointly by the Westpac Bank and the Melbourne Institute revealed that consumer confidence in Australia rose sharply in August. The group's consumer confidence index for August increased 5.4% from July to reading of 119.2 points. Readings above 100 points indicate there were more optimists than pessimists among those surveyed on their feelings about the economy.
Further, the Australian Bureau of Statistics revealed that the total value of owner-occupied housing commitments, excluding alterations and additions, decreased a seasonally adjusted 1% in June from May. At the same time, the value of total personal commitments increased 1.2%.
Chinese stocks rose though, managing to claw back after a massive fall yesterday as buying picked up with the benchmark Shanghai Composite breaking above 2600 point mark. The index closed up with a 12.22 points or 0.47% at 2607.49 amid a plethora of economic data. In July, the total value added of the industrial enterprises above designated size was up 13.4% year-on-year, or 0.3% point lower than that in June 2010; in the first seven months of this year, it was up 17.0% year-on-year, which was down by 0.6% point over that in the first half of 2010. China's consumer price index (CPI), one of the main gauges of inflation, rose in July to its highest level since October 2008, as rising food prices after widespread floods in the country took a toll.
In Mumbai, markets ended sharply lower after an intensely volatile session. The benchmark BSE SENSEX still managed to hold on above 18000 mark in intraday moves. Index heavyweight Reliance Industries (RIL) fell in choppy trade. But, shares of commercial vehicles major Tata Motors surged for the second day in a row after the company reported turnaround Q1 June 2010 results during trading hours on Tuesday, 10 August 2010. The BSE 30-share Sensex was provisionally down 174.35 points or 0.96 % on the day.
In other markets, the Hang Seng index in Hong Kong dropped 0.83%, the TSEC index in Taiwan slumped 1.02% while the Singapore stocks crashed by 1.17%.
Dollar rose in the Asian trades, hitting two-week highs near 1.3000. Dow futures succumbed to a hefty sell off and dropped more than 100 points. Crude and copper corrected while Gold stayed steady to firm, consolidating around $1200 per ounce mark.
