GLOBAL MARKETS
Asia stocks rebound as oil falls below $136
By Kevin Plumberg
Reuters
First Posted 10:18:00 07/09/2008
HONG KONG -- Asian stocks bounced on Wednesday, after oil fell sharply and the head of the Federal Reserve said efforts to help Wall Street banks may continue for longer, easing fears inflation and the credit crisis could worsen a global slowdown.
Crude prices have fallen around $10.99 so far this week to $135.76 a barrel as the US dollar gained and indications an Atlantic hurricane would bypass offshore oil platforms.
Clearer weather also caused corn prices to fall though the cost of soybeans, a major import for China, climbed 1.0 percent.
The mood was cautious, however, as more companies have seen their earnings expectations downgraded in recent days to reflect the crippling combination of higher costs as a result of price pressures and sluggish demand.
"Eyes are on corporate earnings and their outlook comments, and investors will react ruthlessly to disappointing numbers or comments at times like this," said Won Jong-hyuk, an analyst at SK Securities in Seoul.
"Foreign investors will probably react more sensitively to US bank earnings. Some signs of changes for the better are much awaited," Won added.
Japan's Nikkei share average rose 1.7 percent in early trading, rebounding from a three-month low the previous session. Exporters with high-profile brands, such as Honda Motor Co. Ltd. and Canon Inc. helped boost the index.
South Korea's benchmark KOSPI climbed 1.3 percent, up from the lowest close since April 2007 on Tuesday. But shares of LG Display dropped 5.0 percent ahead of its quarterly results.
The country's finance ministers were out in full force on Wednesday, trying to calm the frayed nerves of investors who have knocked Korean shares down nearly 19.0 percent this year.
"I acknowledge there are difficulties but corporate profits are relatively good and fund flows around the stock markets are abundant," Deputy Finance Minister Kim Dong-soo said at a hastily arranged meeting to discuss markets. "I hope investors will not react too sensitively."
Shares of companies in the Asia-Pacific region were up 1.0 percent on the day but down 23.0 percent on the year-to-date, according to an MSCI index. The all-countries world index Tuesday slipped to the lowest since October 2006.
EARNINGS TAKE CENTER STAGE
US Fed chairman Ben Bernanke said overnight the central bank was willing to keep its emergency lending facility open into 2009, calming investors after a Lehman Brothers research report said the two largest US mortgage funders might be forced to raise a combined $75.0 billion in capital.
Those comments helped to lift shares in the US financial sector 5.7 percent and supported the dollar.
The euro was trading largely unchanged on the day at $1.5655 while the dollar was flat at 107.42 yen
Since mid-March, when the Fed backed a plan for JPMorgan to bail out Bear Stearns after a run on the bank pushed it to near bankruptcy, the dollar has stabilized. The New York Board of Trade's US dollar index has risen 2.2 percent since then.
US aluminum company Alcoa Inc. kicked off the earnings season on an upbeat note, after it reported better-than-expected quarterly earnings. Industrial conglomerate General Electric and South Korea's POSCO, the world's fourth-largest steel maker, will both report results on Friday.
Consensus forecasts of 6.7-percent earnings growth in Asia excluding Japan have fallen from 11.5 percent at the beginning of the year, though earnings are at risk of growing by less or even contracting this year, according to some analysts.
"Expectations six months ago were that the economy was booming and that's clearly not the case," said Hans Kunnen, head of investment markets research at Colonial First State in Sydney.
Japanese government bonds slipped after rising shares on Wall Street and the Nikkei curbed demand for safe-haven debt.
The benchmark 10-year yield rose 1 basis point to 1.625 percent, following a brief stint at 1.650 percent.
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