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Asia share rally,but strength may not last long
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nickyng
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30-Nov-2009 14:32
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By Myra P. Saefong, MarketWatch
TOKYO (MarketWatch) -- Stock markets across Asia traded broadly higher
Monday as investor panic Friday over Dubai's debt woes eased, but
analysts say the rally isn't likely to last as concerns over continued
weakness in the U.S. dollar and the progress of global economic
recovery remain.
Temporary reliefDespite the broad climb in stocks Monday, the weak dollar was likely to remain the prominent factor for Asian markets in general, and for Japanese stocks in particular. "Some of the rebound could be based on the hope that intervention occurs" in terms of the dollar/yen trade, "thus adjusting the [dollar/yen] price," Hastings said. "And some of the rebound is a typical valuation bounce from oversold conditions due to misperceptions of the Dubai situation." "Dubai may have delivered some quick relief from the deeply-rooted problem" of the dollar's weakness, he said. "Global central banks have learned how to manage real-estate loan problems, but it seems less likely that the dollar's fundamental problems are so easily managed." Exporter shares in Japan have been particularly hard hit by the yen's strength. Sony Corp. /quotes/comstock/!6758 (JP:6758 2,265, -105.00, -4.43%) /quotes/comstock/13*!sne/quotes/nls/sne (SNE 26.68, -0.78, -2.84%) dropped 4.4% Friday, but was trading 4% higher Monday. Pioneer Corp. /quotes/comstock/!6773 (JP:6773 221.00, -19.00, -7.92%) /quotes/comstock/11i!pncof (PNCOF 2.55, -0.20, -7.29%) , which sank 7.9% Friday, was up 5% on Monday. See Friday's Asia Markets column on Japanese exporters. Good news out of the U.S. helped fuel the rise. "For Japan, the more important news is the U.S. import market, and the weekend's retail sales data that suggest U.S. demand for Japanese exports is stable," said Hastings. But continued weakness in the U.S. dollar against the yen most likely means that the rebound in Asia is not sustainable, he said. "This is not likely to resolve itself, within a short period, back to the 95 to 97 [yen to the dollar] level, which is just the beginning of what is necessary to say we are on solid ground," said Hastings. The U.S. dollar was changing hands at 86.62 yen in midday Monday trading in Asia, down from 86.71 yen in late New York trading hours Friday. "When crisis strikes, global traders go long the [yen], not the [dollar], despite the appearance that this was the case last week," Hastings said. For now, trading in the European session and full U.S. session on Monday "will go a long way to determining how we [in Asia] trade for the rest of the week," said IG Markets' Peacock. Myra P. Saefong is MarketWatch's assistant global markets editor, based in Tokyo. |
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