Asian Market Update

Daily Forex Fundamentals | Written by Trade The News | Nov 05 08 07:10 GMT |

Obama Elected as 44th US President in Landslide, Promise of change to lift America's spirits rallies US currency In a monumentally historic elections, United States voters have swept Jr Senator from Illinois, a virtual political unknown until the 2004 Democratic National Convention, into the nation's highest office, making him the first African American president in US history. Although hardly an underdog going into the tail end of the campaign, few could have predicted the apparent ease of the Obama camp path to victory on election night, with traditionally Republican strongholds in Pennsylvania, Ohio, Virginia, New Mexico, and Colorado falling into Democrat hands with relative ease. And although it took until closing time for polls in California at 11pm, the race was virtually decided when Ohio fell to Obama - a state that McCain had to have and without which Republicans had never won the presidency. After a gracious concession from Sen. McCain, President-Elect took the stage in his home state, praising voter turnout and support of the younger constituency while staking a claim to renewing the nation's promise at a time when the US faces the 'greatest challenge of a lifetime'. In testament to Obama's international popularity, French President Sarkozy extended his congratulations on America's choice for change that 'raises hope in France, Europe, and everywhere in the world'. Attention now shifts to the Congressional elections, with Democrats making inroads toward filibuster-proof majority of 60 in the Senate while also picking up significant ground in the House. Financial markets will also be undoubtedly sensitive to Obama's impending cabinet's choice of Treasury Secretary as new administration inherits sharply rising unemployment, a threat of a severe recession, and a record budget deficit. The expected lukewarm reception of perceivably 'socialist' President-elect in the financial industry was hardly on display in Tuesday's Wall Street session. Major indices defied historic trend of a poor election day market performance with an over 3% rally in Dow and Nasdaq and a 4% gain in S&P. Investor optimism carried over into the Asian markets as major bourses accelerated their US-tracking gains. Nikkei was last seen up over 4%, Hang Seng picked up over 5.5%, and Korea's Kospi and Aussie ASX were trading above 2% to the upside. Among the first-tier companies reporting in Tokyo markets were energy sector's Mitsui division and automotive Isuzu. The former reported a shortfall in H1 net profit of ¥240.55B v ¥251.92B y/y but surpassed prior revenue of ¥8.20T with ¥8.54T. Meanwhile, the latter saw a much worse top and bottom line results relative to last comparable quarter, reporting net profit ¥30B v ¥37B y/y and revenue ¥859.7B v ¥874.5B y/y. Isuzu also cut its FY outlook to ¥40B from ¥85B prior. Elsewhere, Sanyo was once again the subject of takeover speculation as Panasonic reportedly commited to launch a tender offer by as early as January. In US equity markets, HealthSouth, Pioneer Natural Resources and Kaiser Aluminum were among the few notable large-caps reporting earnings. HLS came up short on earnings but guided significantly higher due to debt reduction, sending its shares up by 10% after-hours. PXD missed significantly however, with Q3 EPS coming in well below estimates of $1.21 at $0.90 while sending shares 10% lower. KALU reported mixed, beating EPS estimates by 10c at $0.77 but coming well short of consensus in the top line results, paring its 3.9% gain with 1.2% slide after close. Wednesday morning will see earnings data from Agrium Inc (AGU), Duke Energy (DUK), Foster Wheeler (FWLT), Medco (MHS), Time Warner (TWX), and Luxembourg steel production giant Arcelor Mittal (adr: MT). Preliminary jobs data from ADP and Services ISM on tap for release ahead of Wednesday's US session will also likely determine equity market trading sentiment In currencies, the US dollar received a sharp boost following confirmation of an Obama victory. EUR/USD spiked lower by 170pips from 1.2960 to 1.2790, GBP/USD sold off two big figures to 1.5760, and AUD/USD shed over 100pips to test 0.6850. All those gains have since been reversed with dollar selling maintaining strong correlation to global equity market strength. Meanwhile, trading in risk-gauging Japanese yen based pairs has been relatively subdued as USD/JPY oscillated in a tight 60-pip trading range between 99.30 and 99.80 with European-based yen crosses guided by the performance of home currencies against the dollar. Japanese Yen was not impacted by dovish sentiment from BOJ Governor Shirakawa, who said that market turmoil in Japan is likely to persist for some time despite the absence of turmoil in Japan's commercial paper markets that proved to be so damaging in the US. Furthermore, he saw the likelihood of further strength in the yen and the possibility of USD/JPY going as low as 80 in coming months - a likely prospect if broad global market weakness resurfaces on further evidence of global recessionary trends. In turn, ECB's Stark echoed dovish sentiment of Shirakawa regarding prospects for the Eurozone, stating that low economic growth in Eurozone is expected to extent well into 2009. ECB is set to decide on interest rates on Thursday, with consensus estimates widely calling for a 50bp easing. Following the confirmation that Democrat Obama won the US Presidential election, both gold and oil prices moved to session lows as the USD firmed against the European majors and the commodity-related currencies. Trade The News Staff Trade The News, Inc. Legal disclaimer and risk disclosure All information provided by Trade The News (a product of Trade The News, Inc. "referred to as TTN hereafter") is for informational purposes only. Information provided is not meant as investment advice nor is it a recommendation to Buy or Sell securities. Although information is taken from sources deemed reliable, no guarantees or assurances can be made to the accuracy of any information provided. 1. Information can be inaccurate and/or incomplete 2. Information can be mistakenly re-released or be delayed, 3. Information may be incorrect, misread, misinterpreted or misunderstood 4. Human error is a business risk you are willing to assume 5. Technology can crash or be interrupted without notice 6. 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