Asian market preview 05/08/2008

US markets were closed moderately lower despite a plunge in oil prices which caused oil to close at 3-month low. Oil fell $3.69 to close at $121.41 per barrel and it has plunged nearly $26 per barrel or 17.6% since its peak at $147.27 set on July 11. Oil's retreat was a welcoming news to the markets that initially were sold off after a report from Commerce Department indicated that inflation gauge tied to consumer spending had surged 0.8% in June, which was the biggest jump since February 1981. Investors were also trading cautiously ahead of The Fed meeting which begins later on tonight. Investors are expecting The Fed to do nothing about interest rate in the coming meeting as weak economic data will still give huge pressure to economic recession. The decline of oil prices in recent weeks also give some relief to inflationary fears for The Fed. Investors will be keenly interested in The Fed's economic assessment statement that will accompany the rate decision. Commerce Department also reported that orders to US factory jumped at the fastest pace in six months in June but markets seem to be immune to the news. The Dow ended down by 42.17 pts or 0.37% to 11,284.15, S&P500 fell 11.30 pts or 0.90% to 1,249.01 while Nasdaq fell 25.40 pts or 1.10% to 2,285.56.

Asian markets may open lower yet again today following weaker economic data that came out of the US and also the nervousness waiting for The Fed's rate decision. Declines in oil prices may boost markets later on in the day as inflationary pressure is being taken off the investors' shoulder. Oil was recently traded around $120.60ish per barrel, gold traded around $893.25ish and JPY traded around 108.10ish. Nikkei futures was closed at 12970 in CME last night compared to the close of 12915 here yesterday. Nikkei have opened at 12910 and have moved higher in the first 15 minutes before going back down and then moved back up after 1 hour of trading.

Kospi have opened lower at around 198.75 today and have moved higher to set current high at 201. It then moved back down on US concerns towards 199 and was recently traded at 199.25 at the time of my writing. Kospi is expected to be trading around 197-202ish today with investors are likely to wait for The Fed's decision. The decline in oil may help investors looking for bargain stocks today.

Hangseng may open slightly lower at around 22300 today and may rebounded up today following the huge decline in oil last night in the US. If oil continues to declne, Hangseng may be boosted further with optimism. However, most investors are likely to sit on the sidelines today to wait for news from The Fed. China markets may also play a part in today's trading and may determine how high Hangseng will go or how low it will drop. Hangseng may find its support at 22000 today and its resistance at around 22700.