Asian market preview 11/07/2008

US markets were managed to close in a positive territory last night after a volatile session. The multi-billion merger deal between Dow Chemical Co. and rival Rohm and Haas Co. provided reasons for investors to buy into shares last night and slightly ignore concerns about financial sector and energy costs. Shares of Freddie Mac and Fannie Mae fell further last night, 22% and 13.8% respectively on concerns that they may have to sell more new shares to compensate for losses from the housing slump. Comments by Treasury Secretary Henry Paulson saying that government can't be expected to bail out troubled financial companies sent most investment banks and insurance companies tumbling. The rebound in oil prices also capped the gains in the US markets as oil gained $5 after Iran tested another missile and more supply disruptions in Nigeria is feared. Labor Department reported that new application for unemployment fell 58,000 to 346,000 but continuing claims rose, indicating lingering weakness in the labor market. The Dow finished higher by 81.58 pts or 0.73% to 11229.02, S&P500 rose by 8.70 pts or 0.70% to 1253.39 while Nasdaq rose 22.96 pts or 1.03% to 2257.85.

Asian market may start the day higher today and may continue yesterday's rebound after US markets showed a little bit of buying power last night. However, with oil rose back above $141 per barrel, gains may be limited on inflationary concerns. Investors may not want to hold positions through the weekend in these times of uncertainties. Selling pressure may still be there after comments made by US' Treasury Secretary where they may have to allow financial companies to fail. Oil was recently traded around $141.90ish per barrel, gold traded around $945.75ish and JPY traded around 107.05ish. Nikkei futures was closed at 13130 in CME compared to the close of 13080 here yesterday.

Kospi may open higher today following Wall Street's slightly positive cues. BoK's decision to leave rate unchanged at 5% yesterday sparked a late recovery for Kospi and it may continue on today. However, with oil back above $141 level, gains may be limited and profit taking may take place in these volatile times. Investors may want to cash in ahead of the weekend and before GE's Q2 results to come out tonight in the US. Kospi may find its resistance at around 203 and its support at around 196.

Hangseng may open the day higher today after staging a rebound yesterday. Hangseng managed to stage a 500 pts rally in the first session yesterday but was cut in 2nd session after Chinese market ended the day lower. Today, Hangseng may open around 21900ish and may go back up above 22000. However, Chinese markets may prove to be another test for Hangseng and it may follow the direction of Chinese markets to go up or go back down. The rebound in oil prices may also limit today's gain in the Hangseng market. Hangseng may find its support at 21700 and its resistance at 22200ish.