Profit Taking in Asia to End the Week

Asian exchanged posted followed US markets on Thursday after the US Federal Reserve pledged to keep interest rates low for another three years to nurture the country’s stubbornly slow economic recovery. The Fed had initially told the markets that they would hold low rates tell the end of 2012 but Wednesday, the FOMC moved the date until the end of 2014. US markets surged on the news, as the USD dropped.

The Hong Kong’s Hang Seng Index jumped 1.2 percent to 20,342.71 on its first trading day since the Chinese New Year holiday, just in time to repond to US markets. While,  South Korea’s Kospi rose 0.2 percent to 1,956.21. Followed by  Thailand and New Zealand which also rose. 

Japan’s Nikkei was 0.4 percent lower at 8,853.02 as a weakening dollar pressured the country’s exporters.   

Markets in Taiwan and mainland Chinese remained closed for the Chinese New Year. Markets in India and Australia were closed for public holidays.  

 
The benchmark Hang Seng Index added 232.34 points to 20,342.71 on turnover of HK$29.79 billion ($3.8 billion) in early moring trading. After a rollercoaster morning session, the markets returned after lunch and wer almost flat for the rest of the dayFriday, dragged by weakness in Chinese shares as investors took profits among the out performers in a January rally that had boosted the Hang Seng Index by more than 10 percent to date. 

Despite recent optimism, strength in defensive sectors, such as utilities and communications, along  with Europe’s debt issues unresolved and uncertainty over the extent of a slowdown in the Chinese economy. Chinese growth is hinged on an EU recovery.

It’s a good time to take some profits right now but I think there’s still some more upside to this rally going into month’s end, was the consensus of investors. 

China is scheduled to release manufacturing surveys on the mainland for January next week, which may point to sluggish activity, strengthening expectations for monetary policy easing. 

The Hang Seng Index dipped down 0.04% to close at 20,431.96 near the bottom of a narrow trading range

If this is broken, the target is seen at 20,975-21,017, the highs reached in September and August.

There will be a lot of news on Friday from Europe and the Americas, we will have to wait to see how the Asian markets react Monday.