Asian market preview 03/06/2008

US markets tumbled overnight after economic reports still showed that the economy is still sluggish. ISM manufacturing index fell for 4th consecutive month in May as expected, while Commerce Department said construction spending fell in April for 6th times in the past 7 months due to a drop in home building. Stocks also fell after S&P downgraded financial institutions such as Merril Lynch, Morgan Stanley and Lehman Brothers and revised Bank of America JP Morgan's outlooks to negative. Financial sector was also battered after Wachovia sacked its CEO, Ken Thompson due to a prolonged credit crisis. S&P's reason for downgrading those institutions was because they said that these companies will be forced to make more writedowns in the coming months due to prolonged credit crisis. The Dow fell 134.50 pts or 1.06% to 12503.82, S&P500 fell 14.71 pts or 1.05% to 1385.67 while Nasdaq fell 31.13 pts or 1.23% to 2491.53.

Asian markets may open lower today following the drop in US markets overnight. The high oil prices may weigh on investors and also banking sectors may get quite a beating today after the outlook in the US financials seems to be quite grim. Exporters stocks may be battered as US$ fell against major Asian currencies. Oil was recently traded around $127.60ish per barrel, gold traded around $890.75ish and JPY traded around 104.50ish. Nikkei futures closed at 14210 in CME overnight compared to the close of 14400 here yesterday and 14270 here after hours yesterday.

Kospi may open lower today at around 233-234ish following the drop in US markets and new concerns regarding the health of the economy. Investors may take this opportunity to get some profit after recent gains. The high oil price may not be able to help much either. Exporters stocks may be battered too with the decline in US$. Markets may be volatile yet again as investors may believe that the Korean market is quite strong right now and therefore they may go into bargain hunting mode when market has dropped quite a lot. Strong support point may be found at 230.

Hangseng may open lower today at around 24300-24400ish with renewed concerns on the US economy health. Chinese markets may be in focus still as investors may want to see what kind of state the chinese economy is in. Analysts believe that China may showed some kind of slowdown after the Sichuan earthquake and that may help the market. Hangseng may find its strong support at 24000 and may find its resistance at 24600 today.