Asian market preview 21/05/2008

US markets tumbled overnight with the rising oil prices sparked more inflation worries as oil surged beyond $129 per barrel last night. Investors are turning their attention to oil and posted concerns about how the rising energy prices will affect the recovering of the economy. OPEC said that they won't increase output and it sparked the oil price rally as investors think that supply won't meet demand. The PPI data also didn't help investors as it showed that inflation is rising more than analysts' estimate. Wholesale inflation rose 0.2% and excluding food and energy, it rose 0.4%. Banking stocks also fell last night after analyst Meredith Whitney said she expects the credit crisis to extend into 2009 and that banks may have another $170 billion in writedowns of their assets. The benefiting sector in this situation is again oil producers such as Exxon, Chevron and ConocoPhilips. Another negative news also come from The Fed where they're watching inflation now and indicated that they're most likely to keep rates steady for now. The Dow ended down by 199.48 pts or 1.53% to 12828.68, S&P500 fell 13.23 pts or 0.93% to 1413.40 and Nasdaq fell 23.83 pts or 0.95% to 2492.26.

Asian markets may open lower today and may extend yesterday losses for major markets. High oil price and other commodity prices may spur inflation concerns and these seem to be the main issues for now. Dollar weakness against major currencies such as JPY may also drag exporter stocks down today. I think there may be quite a major correction happened today after markets recovered from its lowest points in mid-March. Oil was recently traded around $128.86ish per barrel, gold traded around $920ish and JPY traded around 103.66ish. Nikkei futures was closed at 14020 in CME compared to the close of 14130 here yesterday.

Kospi may open lower between 239-240 today after edging down yesterday. It may extend losses as investors may want to lock in profits as market tumble. High oil prices won't help the market as South Korea is one of the biggest oil importer. Banking and financials may also take a hit after more credit concerns sparked out of the US. Kospi may fall towards 234ish as its strong support point but may rise up towards 242ish as its first resistance.

Hangseng may open lower today and may extend losses after tumbling yesterday. It may open around 24900ish and may fall more towards 24700 as its first major support point. China mainland markets may also affect the Hangseng market as investors may want to see the real impact of the earthquake. High crude prices may hurt oil refiners as it cut into their profit margins. If Hangseng able to breach the 24700 mark, it may fall towards 24500. If Hangseng able to recover, the 25000 may become its first resistance today. We're talking about the Hangseng futures here and the money market were about 70ish pts more than the futures market.