Asian market preview 19/09/2008

US markets soared last night and posted its best day in 6 years after news that the government is preparing a more comprehensive solution to the financial crisis sparked a furious late rally in the day. The CNBC reported that the government might create an entity to absorb banks' bad debt. It is more like a vehicle similar to the Resolution Trust Corp. formed in the crisis in the late 1980s and the news cheered investors as it showed that the government is doing everything they can to stabilize the financial system. The Fed also added another $55 billion in overnight loans on Thursday. Fears in the market have also led big financial institutions such as Washington Mutual and Morgan Stanley to rush to make a deal and in the process of combining with other banks. Wells Fargo & Co. and Citigroup Inc. are reported to be interested in the takeover of Washington Mutual while Morgan Stanley and Wachovia Corp. are in talks of a possible merger. Gold and Oil again become targets for safe-haven buying by investors as gold rose $50.20 to $900.70 an ounce. Oil has also rose above $100 before it went back down to settle at $97.88 per barrel. Meanwhile, the labor department reported that initial claims for unemployment benefits rose by 10,000 last week to 455,000 due to Louisiana's job losses from Hurricane Gustav. The Philadelphia Fed said that its regional manufacturing report improved 3.8 in September from a negative 12.7 in August and mark the first positive reading since November. The Dow shot up 410.03 pts or 3.86% to 11,019.69, S&P500 rose 50.12 pts or 4.33% to 1,206.51 while Nasdaq rose 100.25 pts or 4.78% to 2,199.10.

Asian markets may open higher today as newfound optimism caused Wall St to rally overnight. With the news that US government will provide some sort of vehicle for bad debt, investors may be confident enough to buy stocks and hold a rally for a few days now. Stocks have been previously battered so bad that analysts believe that now it's a good time to buy stocks as prices are already "cheap". The joint effort by central banks worldwide to inject as much as $180 billion into global money markets may also cheer investors. Markets around the region are expected to post big gains like that of Wednesday but this time, hopefully the rally will last. Commodity companies may also be benefited as oil continue to rise last night and also as gold rose yet again on safe-haven buying buy investors. Oil was recently traded around $98.30ish per barrel, gold traded around $860.60ish and JPY traded around 105.65ish. Nikkei futures was closed at 11760 in CME last night compared to the close of 11555 here yesterday.

Kospi may open higher today following the rally staged by Wall St on the much needed relief news given by the US government. With new-found optimism in the market, investors may rush into stocks to buy stocks at the now already bargain prices. Bargain hunters may lead the way and push stocks higher today. With oil holding steady below $100 per barrel and gold still rushed higher, it may be a good sign and boost the market further. Kospi did not get the chance to react as the news of global central banks plans to inject $180 billion into global money system came after Kospi was closed yesterday. Kospi may find its support at 182ish today and its resistance at 190ish.

Hangseng may open higher today after staging a late recovery yesterday in an exceptionally hectic session. Yesterday, Hangseng was down as much as 7.7% at one point before it staged a 2nd session recovery to close flat. Volatility was very high as investors rushed to buy bargain stocks after the news about global central banks' joint effort to pump money. However, the rally may also be halted if China mainland markets still show some negativity. Investors are still quite nervous after their confidence was being tested to the limit with failures after failures of giant financial companies. Hangseng may find its resistance at 18500ish today and its support at 17900ish today.