Asian market preview 14/07/2008

US markets ended the week lower on Friday amid fresh concerns regarding financial sector especially Fannie Mae and Freddie Mac. The fate of the 2 institutions is being watched carefully as they hold guarantees for about $5 trillion worth of mortgages or about half the outstanding mortgages in the US. Stocks fluctuated with reports saying that the Fed could aid both institutions. The rally in oil also give reasons for investors to let go of their stocks on Friday after oil go back above $147 per barrel during the session. Volatility was high in the session as the Dow dropped more than 250 pts at one time, then it briefly touched the positive side before going back down again. In economic news, US trade deficit narrowed in May as exports, including industrial supplies and consumer goods climbed to all time high. Commerce Dept said growing exports drove trade gap down to $58.8 billion or 1.2% decrease from April. The Dow ended down by 128.48 pts or 1.14% to 11100.54, S&P500 fell 13.90 pts or 1.11% to 1239.49 while Nasdaq fell 18.77 pts or 0.83% to 2239.08.

Asian markets may open lower today following US markets' tumble on Friday caused by the growing concerns about credit market and the stability of US financial institutions. Exporters may be hit after US$ weakened against major currencies and stocks may go down further after oil hit fresh records of above $147 per barrel on Friday. However, the drop may be limited as investors may try to get bargain prices on stocks on optimism that the earnings for Asian companies are not going to be so bad. Oil was recently traded at $144.30ish per barrel, gold traded at $963.85ish and JPY traded around 106.40ish. Nikkei futures closed at 12950 in CME compared to the close of 12935 here on Friday.

Kospi may open lower today after staging a rebound on Friday. With oil go back above $140 per barrel, airlines may be hit again as concerns of high fuel will cut profit may hurt investors' confidence. Kospi may go back down towards 196ish but bargain hunters may limit the drop and drive Kospi back up again. Volatility is expected to be high too as mixed news came out of the US and investors may want to watch closely for this week's financials earnings to come out of the US.

Hangseng may open lower today at around 22000 and may go back below 22000 if investors decided that the rally on Friday is a bit premature. Ever growing concerns about the US credit market and also the state of financial institutions in the US may drive market lower. Exporters and oil refiners may push market down further on profit concerns. However, investors may want to see China's mainland markets too to see how they're performing and to see if Asian markets still have enough reason for a rally. Banks' earnings from China remains positive and the outlook of other sector seems to be doing okay which will give investors reason to buy. Hangseng may find its support at 21700 and its resistance at 22300 today.