Asian market preview 17/07/2008

US markets soared last night posting the biggest one day gain in more than 3 months. Investors are getting into panic mode in buying stocks after Wells Fargo & Co. reported better-than-expected earnings which send the stock up by more than 30%. The upbeat earnings report helped financial sector rallied last night as investors bought into the battered sector which have posted a record decline in the past 5 days. The rally was also boosted by the drop in oil prices, which have brought the oil down more than $10 in the past 2 days. Concerns about slowing economy has brought concerns that the demand for oil maybe diminished until next year. This was shown in the data that reported the US have ample oil supplies. The only negative news came from the Labor Department which reported that consumer prices shot up in June at the second fastest pace in 26 years which should remind investors that inflation still poses a threat to economic growth. The Dow shot up 276.74 pts or 2.52% to 11239.28, S&P500 rose 30.45 pts or 2.51% to 1245.36 while Nasdaq rose 69.14 pts or 3.12% to 2284.85.

Asian markets may start the day higher today following the rally in Wall St and the significant drop in oil prices to below $135 per barrel. Markets around the region may stage a significant rally today after being badly battered for the past few weeks. Financials sector may stage a rebound after the sector rallied the most in US last night. Exporters may also get some boost as Dollar gets stronger against major currencies. Bargain hunting may dominate the markets around the region today and may help to rally further. Oil was recently traded around $135ish per barrel, gold traded around $960.40ish and JPY traded around 105.19ish. Nikkei futures was closed at 13000 in CME overnight, compared to the close of 12575 here yesterday.

Kospi may open with a gap today following a very strong US markets last night and may rally further as the drop in oil prices may help the market. Bargain hunters may kick in today and start buying into cheap stocks. However, the rally may not be sustained as there are still some nervousness around as the financials heavyweight in the US are due to report their earnings later on tonight. Kospi may find its resistance at 205 today.

Hangseng may open gap today following a very strong US close last night. Hangseng may open at around 21700ish today and may test the 22000 mark if bargain hunting really is dominating the market today. With oil prices drop more than $10 in the last 2 days, Hangseng maybe boosted. However, with more earnings to be reported from the US and also China GDP number to come out later on today, Hangseng's gain may be dependant on China mainland markets too today.