Mixed outing for Asian stocks

Markets lack a single unifying theme
Asian markets ended mixed today though the markets lacked a single unifying theme and instead looked to price in country specific dynamics. The overnight US cues were very upbeat and buying support emerged for the select Asian markets while inflationary pressures pulled down equities in China and India. US stocks added sizable gains to open the week on Monday, with dollar weakness earnings from McDonald's and Halliburton. The Dow gained 108.68 points or 0.9% to close at 11,980.52. US business's hiring intentions at their highest level since 1998, according to a new survey by the National Association for Business Economists. The survey also predicted higher capital spending and investment for the next six months. The NABE study covered the responses of 84 members of its association on business conditions in their firm or industry. With the latest gains, the Dow has come within close reach of 12,000 for the first time since mid-2008.
This pushed up the Japanese stocks right from the start and sentiments were buoyed further after the Japan's central bank decided to keep its benchmark lending rate unchanged at 0.0-0.1% as it continues its battle against deflation. The size of the asset purchase fund and the cheap credit program was also kept unchanged at 5 trillion yen and 30 trillion yen respectively. The Bank of Japan also cut its growth forecast for the year starting April 2011 to 1.6 percent from 1.8 percent. Meanwhile, the growth outlook for the current fiscal year was upgraded to 3.3 percent from 2.1 percent, citing revision of past GDP statistics. The benchmark Nikkei 225 Index gained 119.31 points, or 1.15%, to 10,464 by the close.

In Australia, markets were lifted by the data released by the Australian Bureau of Statistics showing that the rate of inflation in the country unexpectedly declined in the December quarter. The Statistics Bureau revealed that its Consumer Price Index rose 0.4 percent for the quarter, hitting an annual rate of 2.7%. The figures compared to 0.7% quarterly inflation and 2.8% inflation for the September quarter. This eased the inflationary expectations slightly and the interest rate worries pertaining to hikes were taken aback. The benchmark S&P/ASX200 Index rallied 21.80 points, or 0.46 percent and closed at 4,808 points.
However, the Chinese equities failed to replicate the performance of its regional peers. Worries about further tightening measures pulled the resources and financials lower and weak global commodity prices also kept the momentum pressed. The benchmark Shanghai Composite Index dropped 18.29 points, or 0.68%, to close at 2,677.43.
In Mumbai, the key benchmark indices extended losses to hit fresh intraday lows in late trade as investors fret over the possibility of more interest rate hikes by the Reserve Bank of India to tame inflation. The central bank raised its lending as well as borrowing rates by a quarter-point to cool inflationary pressures at a quarterly policy review today, 25 January 2011. Interest rate sensitive banking, auto and realty stocks declined. As per provisional figures, the BSE 30-share Sensex was down 182.66 points or 0.95% to 18,968.62.
In other markets, the Straits Times in Singapore dropped 0.14%; Seoul Composite in South Korea gained 0.22% while Taiex in Taiwan dropped 0.23%. The euro eased slightly on profit taking after topping $1.3600 against the US dollar for the first time in two months. The US Federal Reserve is likely to leave policy unchanged and note a slight improvement in the economy's outlook at the end of a two-day meeting on interest rates today. Commodities slipped sharply today with Gold shedding another 20 dollars while crude pared one full dollar.