Asian market preview 12/06/2008

US markets tumbled overnight as oil prices soared to as high as $138.30 per barrel before settling at $136.38 per barrel or rising more than $5 per barrel. Oil prices soared after report showed that oil inventories fell more than estimated. Stocks also drop after concerns that global interest rates may rise on faster inflation fears with commodity prices at record highs. Investors are worried that the spike in oil prices will dent consumer spending and the chance of an economic recovery will go away. With high oil price, other commodity prices will also rise and inflation will rise too which leads to perhaps a rate hike to be made by central banks. The Dow ended lower by 205.99 pts or 1.68% to 12083.77, S&P500 fell 22.95 pts or 1.69% to 1335.49 while Nasdaq fell 54.93 pts or 2.24% to 2394.01.

Asian markets may open lower yet again today following a dismal performance in the US markets overnight. Higher oil price may provide more reason for investors to sell-off stocks today with fears on increasing inflation and the prospect of higher rates in the coming months. With global economic slowdown still linger around, higher inflation is the last thing investors would want to see in the current economic condition. Oil was recently traded around $136.70ish per barrel, gold traded around $881.10ish and JPY traded around 106.80ish. Nikkei futures for June delivery was closed at 13900 in CME compared to the close of 14180 here yesterday.

Kospi may open lower again today after staging a mild rebound yesterday. Kospi may open at around 223-224ish and may fall further towards the 221 level or may even test the 220 level today if investors decided to pull out of stock markets in the current uncertain conditions. Higher oil price and inflation concerns may push stock markets further down today as investors may want to get out of the market. Slightly weaker dollar may not help the market either.

Hangseng may open further down today and may open below the 23000 level today at around 22700-22800ish. Hangseng may fall further towards 22500 if market sentiment remains negative today. China mainland markets may play a significant role too today with the CPI numbers to come out of China where it will gauge the inflation in the country. China markets are under pressure since the governtment urge banks to raise their reserve ratio. Hangseng may find its support at 22500 today and its resistance at 23000.