Asian market preview 27/06/2008

US markets tumbled overnight after downgrades in automakers, financials and bad earnings in tech sector which caused the markets to dive around 3%. The surge in oil and the declining in dollar also played a part in last night's selloff. GM was downgraded to sell by Goldman Sachs on fears that they'll be facing cash crunch next year amid slowing US sales. In the financial sector, Citigroup plunged after analyst gave it a sell rating and warned investors to expect less from the brokerage sector. The tech sector, which was considered a safe play during uncertain times was also hit last night as RIMM missed earnings and disappointing forecasts from both RIMM and Oracle showed that the tech sector is also vulnerable. Oil surge more than $5 during last night's session on comments from OPEC President who was quoted that oil could rise between $150 to $170 per barrel before pulling back later this year. The fears that Libya may cut oil production also became a factor which made oil go past $140 to get to its highest at $140.39 before closing at a record $139.64 per barrel. All these bad news overshadowed some good news which came out from the National Association of Realtors which reported the sales of existing homes edged up 2% in May, and some analysts believe that this was the start of an upward trend in home sales. Jobless claims remains unchanged at 384k compared to last week. The Dow plunged 358.41 pts or 3.03% to 11453.42, S&P500 fell 38.82 pts or 2.94% to 1283.15 while Nasdaq dived 79.89 pts or 3.33% to 2321.37. S&P500 have breached the psychological 1300 level.

Asian markets are expected to open lower today following a string of bad news which hit the US markets overnight and also the surge in oil prices to trade around $140ish. The weakening dollar may not help Asian countries where some of them are major exporters to the US. Financials, tech, autos, transport, oil refiners may be hit today but pharmaceuticals and drug makers may shine yet again today. Selloff in the Asian region may also get worse as today being a Friday may urge investors to sell more. Oil was recently traded around $138.74ish per barrel, gold traded around $914.90ish and JPY traded around 106.90ish. Nikkei futures was closed at 13555 in CME compared to the close of 13785 here yesterday.

Kospi may open lower today at around 217ish today and may extend losses later on in the day. Trading may be volatile as investors who are skeptical will sell their stocks while there are also some bargain hunters who take this opportunity to buy stocks at a sale price. However, selling pressure may be higher today and Kospi may even test the 215 level. Tech and exporters may be hit hard today and financials may also get some selling pressure.

Hangseng may open lower today at around 22000 and may even try to breach the 22000 to go lower today. Mainland China market may not help Hangseng today and may even drag Hangseng further down with oil traded near record high and this caused inflation fears to escalate. Oil refiners such as Sinopec and PetroChina may be hit hard with high oil prices eroding their profit. Exporters may also hit hard as more uncertainties in the US markets cause investors to seek safety. Hangseng may find its support at 21700ish and its resistance at 22200ish today.