Asian market preview 22/05/2008

US markets plunged and extended its decline from the previous day last night after oil soared past $134 per barrel in intraday trading overnight and after The Fed's minute of last month meeting. The Fed expected sharply lower economic growth and higher unemployment later this year, furthermore The Fed may not cut rate anymore as inflationary risks are growing as oil keep rising. The record oil price may hurt companies' earnings as investors feared and may increase prices for other commodities. Strong oil demand from China, an unexpected drop in US and supply disruption from Nigeria caused oil to spike more than $4. All sectors were in the red in the US markets and among the worst performers are airlines companies and retailers. The Dow finished lower by 227.49 pts or 1.77% to 12601.19, S&P500 tumbled 22.69 pts or 1.61% to 1390.71 while Nasdaq fell 43.99 pts or 1.77% to 2456.09.

Asian markets may open lower today following the sharp declines in the US overnight. High oil prices may hurt markets even more as high inflation is haunting Asian countries. High oil means high food prices and that consumers may curb spending further to anticipate the surging fuel and food costs. Energy producer sector may get a boost today with record oil prices and alternative energy may also get a boost. Oil was recently traded around $133.90ish per barrel, gold traded around $931.75ish and JPY traded around 103. Nikkei futures was closed at 13770 compared to the close of 13920 here yesterday.

Kospi may start the day lower again at around 235ish today and may fall further to find support at 233ish. However, recent sharp pullbacks in Kospi may encourage bargain hunters to go into stocks and may limit the loss in Kospi. As many analysts said, Kospi market is currently overweight and are still bullish for the rest of the year.

Hangseng may open lower today at around 25100-25200 today after recovering from losses at 2nd half of trading yesterday. Hangseng may be pressurised as high oil prices may lead to higher inflation in the country. However, China market may still be the driving factor like yesterday as China market recover late yesterday, the Hangseng market also follow suit and make a sharp recovery. Hangseng may find a strong support at 24800 today and may find resistance at around 25600.