Asian market preview 07/11/2008

US markets tumbled last night in a worst 2-day slump since 1987, where markets lost about 10% in total on economic fear. The losses are triggered by Cisco Systems as they issued warning of slumping demand and also as retailers reported weak sales for October. Adding to investors' list of worries, the labor department said the number of people continuing to draw unemployment benefits jumped to a 25-year high, increasing 122,000 to 3.84 million in October. New claims for unemployment benefits dipped by 4,000 to 481,000 last week but the levels remained high. These levels added to the worries by investors who are waiting anxiously for the October employment report due to come out on Friday, which is the most watched barometer of economy's health. Light trading volumes add to the volatility in the markets last night. Analysts also believed that some pullbacks is expected after a recent 6-days run up which saw markets surged more than 15%. Many investors are still waiting on the sidelines and prefer to wait as the markets are in the process of finding the real bottom. Investors are also curious as to what the new elected president, Obama's plan will bring to the economy. The Dow ended down by 443.48 pts or 4.85% to 8,695.79, S&P500 fell 47.89 pts or 5.03% to 904.88 while Nasdaq fell 72.94 pts or 4.34% to 1,608.70. Over the past 2 days, the Dow lost 9.7%, S&P500 lost 10% while Nasdaq lost 9.6%.

Asian markets today may open lower following the 2-day rout in the US after more weak economic readings spooked investors who are still nervous and try to find markets' bottom. Investors also took the opportunity to quickly cash out after the markets made a huge comeback rally since last week. Asian markets tumbled yesterday and may even fall further today as investors are also waiting for more news from the US to gauge how bad and deep the recession problem in the US really is. Crude oil also fell last night on more economic concerns and was recently traded around $60.50ish per barrel, gold traded around $732.10ish and JPY traded around 97.45ish. Nikkei futures was closed at 8390 in CME compared to the close of 8700 here yesterday.

Kospi may open lower today and may extend its losses from yesterday. More economic worries in the US and fears that it may spread globally may make investors to take the money off from the stock market. Foreigners who have been net sellers may sell more today and may trigger local investors to follow the same patterns. However, long term investors may treat this as the usual case for bear markets and may take this as an opportunity to buy more stocks and collect more. Kospi may find its support at 132ish and its resistance at around 140ish.

Hangseng may open lower today and may extend its losses from yesterday on more worrying economic data from the US. More declines in commodity prices may weigh on the market further. However, China mainland markets have been quite steady for the past week and investors may take cue and may collect stocks at current discounted prices. Long term investors may find this as more opportunity to buy more stocks as the markets are re-testing the bottom formed on October. Hangseng may find its support at 12600ish and its resistance at 13300ish today.