Asian market preview 09/05/2008

US markets closed modestly higher last night, following better than expected April sales results posted by some retailers, a larger than expected drop in jobless claims and also the record run by oil. Oil companies and metal producers led the rally in the US markets as oil swept through the $124 mark per barrel and also after gold rose in the session. On earnings front, Wal-mart and News Corp. posted sales that topped analysts' estimates and that helped boost markets too. However, investors started to sell financials again for 2nd day, and after AIG reported another big loss in after-hours, investors may start to worry again for the financial sector as the credit crisis seems far from over although the recovery progress is on the way. The Dow rose 52.43 pts or 0.41% to 12866.78, S&P500 rose 5.11 pts or 0.37% to 1397.68 while Nasdaq rose 12.75 pts or 0.52% to 2451.24.

Asian markets may open higher today following yesterday's correction and also after the US markets closed higher last night. Commodity producers may lead the market again today after oil had another record run and also after gold price rose last night in the US trading session. However, I think market may go into more profit taking mode late in the session going into the weekend, if oil continue to rise, it will spark more inflation concerns around the region. Oil was recently traded around $124.16ish per barrel, gold traded around $882.85ish and JPY traded around 103.85ish. Nikkei futures was closed at 13960 in CME overnight compared to the close of 13930 here yesterday.

Kospi may start the day between 239-240ish today and may gain modestly. However, Kospi may extend yesterday's losses with some chipmakers and tech sector weighing down the market after Nvidia posted losses in the US. Commodities producers may lead the market with record oil prices and higher gold price. Profit taking may be in session though ahead of the long weekend in South Korea.

Hangseng may start the day around 25300ish today and may recover some of its losses for the past 2 sessions today. However, gains may be limited with high oil prices still weighing down on the market. China PPI also due out today and that may give us some clues on how the inflation in China will be affecting the market. Analysts have predicted smaller inflation in April but with oil prices keep going higher and food prices keep rising, it will be hard to tame inflation. Hangseng may rise up to 25500ish and if it should fall, 25000 is a strong support point. If it breach that, it may go down towards 24700. Profit taking may take place again ahead of the long weekend in Hong Kong.