Asian Market Update: Renewed Selling in US Sinks Asian Bourses, RBA Exceeds Easing Forecast Yet Again, BOJ Maintains 0.30% amid fresh accommodative measures

- An ominous NBER confirmation of US recession going back to late 2007 and a tumble in the manufacturing sector in China torpedoed much of last week's US equity gains. In spite of a respectable showing by beleaguered US consumers at the official start of the holiday shopping season, US equities put in the 4th largest on record decline for the DOW, with the aftershocks spreading across Asian bourses.

- Tokyo 's Nikkei led regional selloff with a 5% drubbing amid acute weakness by local automakers. Honda and Fuji Heavy Ind. shed over 6.5% each following reports of domestic car sale declines of 22% and 17% respectively, while Toyota Motors has announced temporarily suspended production at some of its Japan plants and slashed year-end bonuses of up to 5000 company managers. Steel-makers Kobe and JFE Holdings declined by 5.5% and 8% respectively on renewed concerns of material demand in a deep recessionary climate. In an emergency meeting BOJ kept interest rates unchanged at 0.30%, but demonstrated greater leniency in money market operations, allowing corporate debt as collateral while also lowering minimum eligibility rating for participation from A to BBB. Furthermore, BOJ pledged to provide additional liquidity into the repatriation heavy fiscal year end.

- In Australia , central bank took its overnight cash rate down to a six and a half year low of 4.25%, cutting by 100bps versus expectations of a 75bps for a second consecutive monthly excess cut. RBA cited persisting fragile market sentiment and reiterated its forecast of declining inflationary pressures while maintaining activist measures to keep Aussie economy out of recession in 2009. Moreover, RBA expressed its goal of stimulating domestic demand as well as rescuing its housing sector - sentiment echoed by Prime Minister Rudd and Treasurer Swan, who urged banks to pass on the rate cut to borrowers. Westpac and National Australia Bank heeded government request, cutting its lending rates by 80bps and 100bps respectively. In earlier Aussie economic data, better than expected consumer sales for the month of October boosted retailers David Jones and Harvey Norman by 5.5% and 3.3% respectively. Despite the upward surprise from consumers and Q3 current account however, the equity slide in US and subsequent commodity selloff pressured S&P/ASX index by over 3%. Miners BHP and Rio Tinto dropped over 6.5%, Woodside Petroleum declined by 6%, while precious metal notables Sino Gold and Newcrest fell 9% and 3% respectively as spot gold fell the most in over 8 months.

- In currencies, US dollar consolidated the gains made in the course of the previous European session, with EUR/USD contained by 1.2570-1.27 and GBP/USD oscillating in 1.4810-1.4940 ranges. Swiss Franc has also paused its rally against USD, trading rangebound in 1.2020-1.2060, just as it looked to join the greenback and Japanese yen as a low-yielding funding currency benefiting from deleveraging flows. Both EUR/CHF and GBP/CHF have sold off aggresively since late last week. Japanese Yen rallied slightly after BOJ remained at 0.30%, but was unable to test its session highs. Intra-day support levels in USD/JPY, EUR/JPY, and GBP/JPY remained preserved at 92.85, 117.25, and 138.00 respectively. Commodity-driven AUD and CAD have also stayed subdued after declining in early US hours. Critical AUD/USD support is found at week-long lows of 0.6340 while USD/CAD corrective selling was repeatedly met with bullish interest at 1.24.

- Crude oil is lower and earlier during the session traded below $48 for the first time since Feb 2005. During the US session crude fell by as much as 9% as the November ISM manufacturing data hit a new 26 yr low. Spot Gold is also declining after dropping by more than 4% or $35. 00 in US trading. Also, Tokyo and Shanghai Gold are both lower by more than 4%. The decline in gold prices comes amid a broad sell-off in commodities and as the USD has seen sharp recent gains against the GBP and some of the commodities currencies.