The Asian stock markets ended mixed yesterday with the Nikkei up 0.36%, All Ords down 0.02% and Straits Times up 1.32%. Japan's Tankan index charting a near two-year high fuelled the surge in Japanese stocks while Singapore's surge in home loans fed the gains of banks, DBS and others.
The Asia credit benchmarks remained stable with the iTraxx Asia ex Japan tightened by 0.14bps.
UBS reported $3.4 billion in losses due mainly to securities linked to the US subprime mortgage sector while Credit Suisse said it would be "adversely impacted" by the market turmoil but would remain profitable. In the other side of the Atlantic, Citigroup warns of a 60% drop in quarterly earnings stemming from $5.9 billion in losses and write-downs from subprime and leverage loan woes, fixed income trading, as well as weakness in its consumer business. Citigroup, however, expects the bank to "retun to a normal earnings environment in the fourth quarter."
Despite the profit warning from Citigroup, US stock markets advanced with the S&P up 1.33% and Dow Jones up 1.38% as investors are on renewed optimism that the worst of the credit squeeze is over. Keen on the vicissitudes of the markets, some obeservers however say this may not be so. Currently, there are snippets of reports circulating that Deutsche Bank is hit with a 1.7 bn euros ($2.4 bn) loss from loans that have dwindled in value as a result of the credit market crisis.
Ahead of the Reserve Bank of Australia's board meeting today, most economists predict that it will keep its benchmark rate unchanged.
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