Asian market preview 09/06/2008

US markets fell sharply on Friday following a series of bad economic data. The labor department said that unemployment rose by 5.5% in May after an increase of 5% in April and was the biggest monthly increase since February 1996. The rise leaves unemployment at its highest level since October 2004 since analysts had predicted an uptick of only 5.1%. The worst news came from oil prices where it rose $10.75 to settle at $138.54 and kept increasing to close at $139.12 in after-hours trading on the Nymex. The gains in oil had erased a previously optimist economic outlook investors had been hoping for in the 2nd half of the year. The gains in oil also marked the biggest ever 1 day rally ever recorded on the Nymex for oil. The rally was caused by the tension build up in Middle East after Israel issued a warning that they might attack Iran if they do not abandon their nuclear program. Morgan Stanley's analyst's forecast of oil hitting $150 per barrel by July 4th also helped the rally in oil. Finally, the ever increasing demand led by China caused the oil prices to soar the its record close ever. The Dow was battered and was closed down by 394.64 or 3.13% to 12209.81, S&P500 plunged 43.37 pts or 3.09% to 1360.68 while Nasdaq fell 75.38 or 2.96% to 2474.56.

Asian market may open lower today on skepticism regarding the state of the US economy. The high unemployment rate and the surge in oil price while the Dollar weakened may cause high selling pressure in the market today. Investors who have gained some optimism regarding the state of the US and global economy and also the prospect of an economical recovery in the 2nd half of the year may think otherwise after the rally in oil which may send inflation fears to Asian countries. Exporters may be battered after US$ weakened against major currencies. Oil was settled at $139.12 on Friday, gold was traded around $901.25 and JPY traded around 104.90ish. Nikkei futures was closed at 14050 in CME compared to the close of 14470 here on Friday.

Kospi may open lower today following the sell-off in the US on Friday session. Kospi was closed for a holiday on Friday and investors may find themselves seeking shelter for the plunge in the stock markets. Trading may be rough with oil going towards $140 per barrel and investors confidence may be dented by the state of the US economy. Kospi may go below 230 level today if investors decided to sell most of their stocks on the worrying economic data. Little optimism is expected to come from the investors today and this may cause Kospi to fall more than 3% for the day. Stocks may be hit hard as South Korea is a major oil importer.

Hangseng is closed for a national holiday today.