Asian market preview 23/07/2008

US markets closed sharply higher last night after oil tumbled more than $3 per barrel, bringing the decline to nearly $20 per barrel in the past week. Markets were initially in sour mood after American Express missed earnings estimate and also after Apple issued a weaker-than-expected forecast for the current quarter. However, after oil fell $3.09 to settle at $127.95 per barrel, the general markets were encouraged to rally up. Analysts are certain that many earnings report will still be bad, but if oil continue to slide down, the market in general will be boosted up and the impact of bad earnings are localized to the corresponding companies. Bargain hunting dominated the markets last night with financial sector led the way up after it had been battered for the past few weeks. Even Wachovia Corp. shot 27% higher after the stocks initially was pummeled to levels not seen in 1990s, after the company reported $8.9 billion loss because of charges and reserves for bad mortgage loans. The Dow rose 135.16 pts or 1.18% to 11,602.50, S&P500 rose 17 pts or 1.35% to 1,277.00 while Nasdaq rose 24.43 pts or 1.07% to 2,303.96. After-hours, Washington Mutual Inc. and E-Trade Financial Corp. reported losses after boosting reserves to cover bad loans.

Asian markets may open higher today following the drop in oil and rally in the US markets last night. Investors may find more optimism and more reason to buy into stock markets after oil continued its slide from last week. Investors may be hoping that with lower oil prices, companies' earnings may pick up by itself later on. Bad earnings keep coming out of the US big companies but now earnings report seem to have lost its dominance over the market in general as oil going towards $120 level. Oil was recently traded around $128.50 per barrel, gold traded around $946.45ish and JPY traded around 107.19ish. Nikkei futures was closed at 13340 in CME last night compared to the close of 13095 here yesterday.

Kospi may open higher today following the new optimism found in the US caused by oil's tumble. With US$ strengthening against major currencies, exporters may rally today along with other stocks in general and financials may lead the rally. Kospi may open around 204ish and may find its resistance at 208ish today and may find its support at 203ish. Investors may still be cautious ahead of the busy earnings week in the US as with just a piece of bad news, investors may find reasons to lock in their profit.

Hangseng may open higher at around 22700ish today following the higher close in the US markets and after oil tumbled further. Oil refiners such as Sinopec and PetroChina may be boosted with lower oil prices while CNOOC may be battered as oil prices fell sharply. Financials may be boosted again today and exporters may also rally up. Hangseng may try to get to 23000 if market sentiment remains positive for the rest of the day. China markets may also play a part in determining whether the market is strong enough to get to the 23000 level today. Hangseng may find its support at 22500ish and its resistance at 23000 today.