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Asian Stocks Waver as Early Rally Loses Steam

CNBC.com
Tuesday, 3 Feb 2009 | 5:13 AM ET

Asian stocks were all over the place Tuesday in choppy trade. Markets initially rallied on the back of increasingly aggressive efforts by governments to stabilize markets and support their economies. But the rally lost steam in the afternoon with Japan closing in negative territory.

Technology stocks though -- some of whom were beaten down the hardest during the worst days of 2008 -- rose. This in turn helped investor willingness to take risks and lift higher-yielding currencies such as the Australian and New Zealand dollars.

In the currency market, the dollar and the euro both strengthened against the yen on hopes the action by the Bank of Japan will help to stabilize the markets and ease risk aversion. The Australian dollar strengthened against the dollar and yen , after the Australian government also unveiled a $26.5 billion economic stimulus package that included a one-off cash handout and infrastructure spending. Oil futures are currently trading above $40 a barrel level in the Asian session.

Japan's Nikkei 225 Average, finished 0.6 percent lower in volatile trade, with grim earnings outlooks offsetting optimism after the Bank of Japan said it would buy up to $11 billion worth of sharesheld by Japanese banks to ease the pain of the global financial crisis. Before the central bank's announcement, the average ended morning trade up 0.1 percent.

South Korea's KOSPI rose 1.4 percent as technology stocks including Hynix Semiconductor climbed 2.3 percent on continued expectations for a industry bottom, while Hyundai jumped after lead managers for its planned sale were announced on Monday.

Australian shares closed up 0.3 percent as an upbeat profit forecast from Commonwealth Bank of Australia revived confidence in banks, but Incitec Pivot and United Group slumped
after profit downgrades. Investors also sold property stocks to make room to buy A$2.9
billion (US$1.8 billion) of additional shares sold by Westfield Group.

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Hong Kong stocks slipped 0.7 percent into the red. Chinese shares rose, but dismal home loan data hurt property stocks and Li & Fung shares suffered from declining consumer spending in the US. After picking up pace in the last two months of 2008, new home sales turned sluggish in January, retreating to October 2008 levels. Hang Lung Properties dropped 7.2 percent while Cheung Kong Holdings, Asian billionaire Li Ka-shing's property flagship, also fell.

Singapore's Straits Times Index was 0.4 percent higher in lackluster trading. Bank issues that were sold down yesterday such as DBS Group and UOB bounced back higher.

China's Shanghai Composite Index rose nearly 2.6 percent after data in the past few days, and expectations for more government action to aid the industrial sector, raised hopes for an economic recovery. Shares surged in some industrial metal producers such as Aluminium Corp of China. In the financial sector, life insurers and brokerages outperformed, with China Life and CITIC Securities both up.