Indian Metal Stocks Fall on China Concerns

In India on Friday, metal stocks turned lower on concerns over possible monetary tightening to come over the weekend from China. The BSE Metal Index was down 0.6% with Hindalco Industries down 1.1% to 219.75 rupees ($4.86), Jindal Steel down 0.9% at 654.70 rupees and Tata Steel down 1.2% at 616.30 rupees.

China is the world’s biggest consumer of metals, so a drop in sales volume could hurt suppliers.

“Apart from the fears of monetary policy tightening in China, a strong dollar against the rupee also remains a cause for concern,” says managing director Deven Choksey of K.R. Choksey. Recent strength in the U.S. dollar pushes down metal prices, quoted in dollars, as the local currency’s buying power falls, hurting demand. Mr. Choksey is still bullish on the sector in the long term owing to expectations of high demand.

-Swagata Gupta

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Asian Stocks Retreat as Euphoria over Fed’s Stimulus Fades

Most of Asian stock markets posted losses Tuesday as euphoria over the Fed’s stimulus faded, pulling back from rally that drove some benchmarks to record highs.

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Japan\'s Nikkei 225 stock average tumbled 0.5 percent to 9,689.28. Australia\'s S&P/ASX 200 lost 0.9 percent to 4,736.40. China\'s Shanghai Composite Index shed 0.6 percent to 3,141.079.

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Hong Kong shares were in red Tuesday afternoon with Hang Seng Index was down 0.5 percent to 24,852.30. Real-estate stocks were weak, with Sino Land Co. falling 5.9% after its announcement of share sale.

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On the contrary, markets in Singapore, Taiwan, and South Korea were higher.

The Kospi edged up 0.1 percent to 1,944.26.

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Indexes in Indonesia, India, Malaysia, and the Philippines have hit new highs recently. Global stocks and commodities gained extension last week thanks to the U.S. Fed’s approval of $US600 billion worth of Treasuries over the following eight months to stoke the sluggish economy.

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Gold price set a new record high, above $1,400 an ounce as investors are turning to precious metals to preserve their wealth. They remain worried about inflationary pressures. According to Miguel Perez-Santalla, vice president of sales at Heraeus Precious Metals Management, gold price is going to set new highs if investors continued buying precious metals in stead of other recourses.

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Gold futures edged higher on Globex during Asia’s Tuesday morning trading, hiking to a fresh intraday high of $1,410.10 an ounce.

Futures prices marked a record closing high of $1,403.20 in New York on Monday.

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In Monday’s trading, U.S. stocks retreated from more than two-year highs amid resurfacing worries about Europe’s unsettled debt issues.

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The Dow Jones Industrial Average left six straight sessions higher, falling 0.3% to 11,406.84. The S&P 500 Index shed 0.2% to 1,223.25 while the Nasdaq Composite Index closed up 1.07 points to 2,580.05.

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Tyco International Ltd, Sempra Energy, and Marsh & McLennan Cos are among the companies whose shares are projected to see active trade in Tuesday’s session.

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QE2 Boosting Stocks Around the Globe

By Dave Kansas

How much did global stock markets like the launch of QE2 by the Federal Reserve last week? A lot.

This week is off to a more middling start. European shares are edging lower after Asian stock markets had another solid day, led by Tokyo’s 1% gain.

Let’s recap QE2 week. Asia – where a lot of those hundreds of billions of bucks are expected to end up – did best. The Nikkei gained 4.6% for the week, the Shanghai Composite rose 5.1% and the Hong Kong Hang Seng soared 7.7% to a nearly 3-year high. The Bombay Sensex 30 added 4.9% to clip a new record close while Australia and South Korea each gained 3%.

Europe’s big bourses all rose, with the FTSE 100 (up 3.4%) and the DAX (up 2.3%) both closing at fresh 2010 and 52-week highs. The Paris CAC-40 gained 2.2% and is a sliver off a new 2010 closing high.

On the home front, the Dow Jones Industrial Average gained 2.9% and is now up 18% since July 2. The Nasdaq Composite gained 2.9% and 23% since July 2. The S&P 500 jumped 3.6% and has rallied 20% from July 2. The Dow Jones U.S. Total Stock Markets Index gained 3.7% and is up 21% from July 2.

All in, plenty of green. Makes you wonder why global leaders are so irked with Big Ben Bernanke.

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Stocks, Bonds to Open Lower Before India Rate Meeting

India’s Sensex stock market is likely to open about 50 points lower, following on weak cues from other Asian markets as well as previewing the central bank’s monetary policy review later Tuesday, one local dealer says.

“Since it’s such an event-heavy week, with the central bank’s monetary policy meet today and the [U.S. Federal Reserve] meeting tomorrow, investors will stay light and take a call once these events are done with,” says one local dealer. He adds that the market’s opening should be tepid and predicts it will trade in the 20,200-20,500 band during the day. Thirteen out of 20 economists polled by Dow Jones expect the Reserve Bank of India to increase the repurchase rate by 0.25 percentage points to 6.25% and reverse repurchase rate by an equal amount to 5.25%.

The Sensex closed 1.6% higher at 20,355.63 on Monday.

Another dealer with a state-run bank predicts Indian government bonds are also likely to open lower.

He predicts the 8.13% 2022 bond is likely to trade in 8.05%-8.11% range vs. 8.07% on Monday.

“The hawkish statements on inflation in the central bank report last evening may weigh on sentiments. But markets will also look for a shift in central bank stance on the future of its rate tightening moves,” the dealer said. He adds that markets have factored in a 0.25 percentage point increase in rates, and anything more is likely to sour sentiment, while a decision to hold rates steady could spark a strong rally.

– John Kumar and Nupur Acharya

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