Asian stocks fade after magical Monday

Sentiments was nervous as traders eye US Fed meet amid lack of major data
Asian stocks slipped after yesterday's gains as wary investors sold their holdings following firm undertone in the US dollar and selling pressure in commodities. The sentiments was nervous as traders eyed the US Fed meet, which is starting later on today and lack of major economic data on the global front kept the downside pressure on throughout the session. This made stocks gave up yesterday's gains when the buying spree in the Asian markets as China signaled an end to the yuan's fixed rate to the dollar, boosting confidence in the global economic recovery and lifting the outlook for world exports.

The DOW futures steadied in positive territory after China upped the Yuan's daily mid-point against the dollar at the highest level since the July 2005 revaluation, making traders think that the People's Bank in China is effectively pushing for a stronger Yuan, as expected widely after the central bank said so in a statement over the weekends. However, the DOW futures slumped thereafter, as the dollar rose under 1.2300 and were last seen holding down 37 points.
The Japanese stocks ended in red as traders opted to lock in gains following recent rally that lifted the market to a 1-month high. The benchmark Nikkei 225 Index lost 125.12 points, or 1.22%, to 10,113, while the broader Topix index of all First Section issues was down 7.93 points, or 0.88%, to 895.
On the economic front, a statement released by the Cabinet Office revealed that it expects the Japanese economy to grow much faster than initially estimated in the current fiscal year. As per the statement, growth is now seen at 2.6% in the year to March 2011, up from the previous projection of 1.4%. For the fiscal 2011/12, the government estimate 2% growth. The upward projection was driven by rise in exports, especially to Asia. A recovery in capital spending as well as improving corporate profits also supported the revision.
The Australian stocks ended in negative territory as enthusiasm about China's move to let its yuan trade freely against the US dollar faded following weak closing on Wall Street in the previous session, making the market come off its five week highs. The benchmark S&P/ASX200 Index dropped 54.30 points, or 1.18% and closed at 4,558, while the All-Ordinaries Index ended at 4,581, representing a loss of 51.40 points, or 1.11%.
On the economic front, a statement released by the Australian Bureau of Agricultural and Resource Economics, or ABARE, revealed that commodity export earnings for the country are set to rise by 23.4% in 2010/11 to A$202.5 billion. "Reflecting continued recovery in the world economy, we are expecting growth in export earnings from the farm sector as well as the minerals and energy sector in 2010/11." said ABARE deputy executive director Paul Morris.
In China, markets reversed earlier losses as expectations for a stronger Yuan continued to drive investor demand. Stocks eked out small gains as selling pressure on resources and materials had a trigger effect, making Shanghai Composite add just 0.1% by the close.
In Mumbai, the key benchmark indices slumped to fresh intraday lows in late trade as European stocks extended losses and US index futures turned negative. Index heavyweight Reliance Industries (RIL) edged lower in volatile trade. Metal, banking and IT stocks fell. The BSE 30-share Sensex was provisionally down 127.95 points or 0.72%, up close to 20 points from the day's low. FMCG stocks rose. The market breadth was negative in contrast to a positive breadth earlier in the day.
In other markets, South Korea's Kospi shed 0.5%, Taiwan's Taiex slipped 0.3%, Hong Kong's Hang Seng Index lost 0.5%, New Zealand's NZX 50 pared 0.5% and Philippine shares slid lower by 0.2%.
In overnight trades, the US stocks were unable to sustain initial gains and turned lower over the course of the trading day on Monday, as news of China easing its currency policy raised concerns about increased costs for U.S. corporations and consumers. The major averages closed in red. The Dow edged down by 8.23 points or 0.1% to 10,442, the Nasdaq declined by 20.71 points or 0.9% to 2,289 and the S&P 500 slid by 4.31 points or 0.4% to 1,113.