Black Friday is Now! Don’t miss out on up to 60% OFF InvestingProCLAIM SALE

RPT-GLOBAL MARKETS-Asia stocks edge up but wary of China

Published 08/18/2009, 11:23 PM
Updated 08/18/2009, 11:27 PM
SOGN
-
TM
-
HG
-
CL
-

* No clear direction, with China stocks choppy

* Chinese banks on tap to report results

* Metals edge up, oil climbs above $70 on inventories (Repeats to more subscribers)

By Kevin Plumberg

HONG KONG, Aug 19 (Reuters) - Asian stocks edged up on Wednesday but hovered near three-week lows hit the previous day, with investors cautious ahead of Chinese bank results and wary that profit taking will continue to stall a six-month rally.

Equities, metal prices and cyclical currencies like the Australian dollar saw modest bounces, but investors were prone to slashing their bets on riskier assets after shares in Shanghai fell 16 percent in the last two weeksm, rattling global markets.

China has become the focal point of investors, with volatility in domestic markets rising on fears that the days of easy money are coming to end. But how much this is tied to doubts about China's recovery and what extent that affects the rest of the world beyond sentiment is uncertain.

"There is still a great deal of confusion of the link between China's recovery and its domestically focused growth model and the notion that China can save the world," said Patrick Bennett, Asia foreign exchange and rates strategist with Societe Generale in Hong Kong, in a note.

"If there remain expectations or pricing or positions on the latter notion, then this developing risk consolidation/reversal must have further to run."

Crude oil rose by a $1 to $70.18 a barrel on a sharp drawdown in U.S. inventories last week, but remained near the top of its summer trading range.

U.S. stock markets rose around 1 percent overnight, rebounding from sharp losses on Monday, as better-than-expected results from big retailers encouraged investors to get back into the market. [.N]

But analysts remain worried about weak consumer demand. Many firms which have beat or met market expectations this earnings season have done so by cutting costs, not by moving more goods out the door.

The MSCI index of Asia Pacific stocks outside Japan ticked up 0.4 percent in morning trade on Tuesday. However, support from the materials sector, which has led the rally in regional markets, was fading.

The Shanghai composite <.SSEC> slipped 0.3 percent after hitting a two-month low on Tuesday, weighed by metals and minerals producers.

Short-term trading signals have moved swiftly from reflecting overbought conditions 12 trading days ago to now being slightly oversold.

Bank of Communications <3328.HK><601328.SS>, the country's fifth-largest lender, will kick off Chinese bank first-half results on Wednesday, followed by two of the world's biggest banks by market value later in the week: Industrial and Commercial Bank of China <1398.HK><601398.SS> and China Construction Bank <0939.HK><601939.SS>.

Pressure on net interest margins is expected to hurt the banks' results despite barely receiving a scratch from the global credit crisis.

Investors will also be keen on any clues for second-half loan growth amid concerns Beijing has been trying to curb red-hot lending to avoid overstimulating the economy as it recovers. [ID:nPEK217845]

Japan's Nikkei share average <.N225> dipped 0.2 percent, hurt by weakness in retailers and real estate stocks, but Sanyo Electric <6764.T> surged as much as 17 percent after a source said it would sell batteries for hybrid cars to Toyota. [.T]

The Australian dollar still remained largely shackled to the whims of Chinese stocks, given the strengthening trade ties between the countries.

The Australian dollar rose 0.2 percent in choppy trade to US$0.8276 , though was near an 11-month high around $0.8477 reached on Friday.

The U.S. dollar was largely unchanged against the euro and yen after a small dip overnight as Wall Street recovered. The euro was at $1.4141 while the dollar traded hands at 94.63 yen .

Three-month copper traded on the London Metals Exchange rose 1 percent to $6,140 a tonne, while Shanghai copper was up by 0.3 percent to 48,290 yuan .

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.