Asian market preview 25/07/2008

US markets tumbled more than 2% overnight after sales of existing homes fell more than expected and also after jobless claims shot up beyond 400,000 last week as companies slashed employments to cope with slowing economy. Financial shares had their worst drop in 8 years as investors punished them and home builders after some disappointing government reports. The optimism built over the past few sessions on good earnings reports have faded in an instant and investors were brought back down to earth. Mixed earnings from Ford Motor and Dow Chemical, which reported weaker-than-expected earnings also soured the mood of investors. Drugmakers and Amazon Inc. however posted better results for Q2. Investors were driven by profit taking and also fears that the worst is far from over after Bill Gross predicted that housing slump will cost banks and brokerages $1 trillion and we're still less than halfway over. The Dow ended lower by 283.10 pts or 2.43% to 11,349.28, S&P500 fell 29.65 pts or 2.31% to 1,252.54 while Nasdaq fell 45.77 pts or 1.97% to 2,280.11.

Asian markets may open lower today after gaining for the past few sessions. Markets around the region may open lower and fall further after skepticism resurfaced as housing slump continues in the US. Oil also have regained ground last night, gaining almost $2 back above $125 per barrel. Profit taking may dominate asian markets today as today being a Friday and investors may want to enjoy profits. Oil was recently traded around $125.61 per barrel, gold traded around $927.55 and JPY traded around 107.40ish. Nikkei futures was closed at 13420 in CME compared to the close of 13565 here yesterday.

Kospi may open lower today following the sharp drop in US markets and may fall even further after the news regarding South Korean GDP which rose more than expected. GDP rose 0.8% vs an estimated of 0.7% rise this quarter on higher oil. High inflation fears may spark more concerns for investors and may provide more reasons to sell stocks today and reap some profits over the previous sessions of gains. Kospi may fall back towards 205 level if investors are taking this opportunity to get out of the market.

Hangseng may open lower following US cues overnight which indicated that the condition have not stabilize yet for US financials sector. Hangseng may open below 23000 and may go towards 22500 today if investors decided to enjoy profits ahead of the weekend. Over the past week, Hangseng have risen more than 1,000 points and I think it is the right time for investors to reap some profits before more bad news came out of the US. The drop in existing home sales in the US indicated that housing slump is far from over. China markets may also play a part in determining on how low will the market. Hangseng may find resistance at 23000 today and support at 22500.