All eyes in this region will be on markets today after news of the second lift in China’s reserve asset ratio for banks came after trading ended Friday.
Chinese markets were firmer last week, but the shares of big companies traded in New York fell on Friday night in reaction to the news of the second tightening in the ratio in a month.
The news will hit market sentiment in this area today with trading weak.
Markets in China and Taiwan will be closed for the week because of Lunar New Year celebrations.
Singapore, Hong Kong and South Korea will be closed today and or tomorrow, meaning only Japan and Australia will be open to take the brunt of any nervousness after the government’s move in China.
Ours will be softer by around 10 to 20 points on the ASX 200 after the overnight futures trading Friday night and Saturday morning.
In Europe, investors will be watching to see what happens to confidence after the news that Greece’s economy contracted by more than expected in the December quarter and over 2009 after the revision of previously released figures.
Any nervousness in Asia will also impact trading in Europe tonight.
But most US markets will be closed tonight because of a public holiday.
US markets dipped on Friday, but still had their best week in the last five.
The Dow and S&P 500 both fell Friday.
The Dow dropped 45.05 points, or 0.4%, to 10,099.14. The S&P 500 slipped 0.3%, to 1075.51. But the Nasdaq Composite Index rose 0.3%, to 2183.53.
For the week the and the Dow and the S&P 500 both rose 0.9% and Nasdaq added 2%.
Despite the better week, the S&P 500 is still down 6.5% since hitting a 15-month closing high on January 19.
Not helping sentiment in the US was weaker-than-expected data on US consumer sentiment and business inventories and on euro zone gross domestic product.
But retail sales last month were better than forecast.
The Reuters/University of Michigan Surveys of Consumers said its preliminary index of sentiment for February was 73.7, below forecasts of 75.0.
European stock markets were also sluggish, with London’s FTSE 100 index up just 0.35% on Friday, Frankfurt’s DAX 30 rose 0.84% and the CAC 40 in Paris added 0.6%.
The Dow Jones Stoxx 600 Index fell 0.3% on Friday to be down 7.4% from this year’s high on January 19.
But it still managed to eke out a gain of 1.5% after the European Union pledged what it said in a statement would be “determined and coordinated action” to help Greece.
However, news that the European economy slowed sharply in the 4th quarter didn’t help.
Growth was 0.1%, down from 0.4% in the third quarter and thanks to a rise of 0.6% in France, according to first estimated from the EuroStat organisation.
German growth slowed sharply to be flat, after growing by 0.7% in the third quarter.
In Greece 2009 was a disaster and growth in the final quarter fell 0.8%, with earlier estimates revised downwards in another example of questionable statistical reliability from that country.
The Italian economy tipped back into the negative as well, falling 0.2%.
National benchmark indexes declined in 12 of the 18 western European markets.
The Greek market fell 2.1% on Friday after the country’s statistics service revised down its growth figures for 2009 for the first three quarters.
In Asia, news of the Chinese monetary policy tightening came too late for the markets.
As a result the region’s markets finished higher over the day and the week.
The MSCI Asia Pacific Index added 1.5%.
That left it down 8.2% from the peak on January 15.
Japan’s Nikkei rose 0.4%, South Korea’s Kospi index added 1.7%, Hong Kong’s Hang Seng Index climbed 3.1% and China’s Shanghai market rose 2.7%.
As well as stock markets in China and Taiwan being closed this week, markets in Hong Kong, Malaysia and Singapore are shut today and tomorrow and there is no trading in South Korea today.
The Australian sharemarket closed slightly higher, chalking up the first weekly gain in five weeks, on gains in the materials sector.
At the close, the benchmark ASX200 index was up 7.8 points, or 0.2%, at 4562.1, rising about 1% over the week.
The All Ordinaries index rose 13 points, or 0.3%, to 4588.8.
Chinese
sharemarkets jumped 50% in the year of the Ox which ended on Friday.
The Shanghai Composite Index rose 1.09% on Friday and 2.7% last week to complete a strong year of gains.
The year of the Tiger started yesterday.
The Shanghai Composite Index started the year of the Ox on February 2, 2009.
It finished at 3,018.13 points on Friday.
Trading on the first day of the year of the Tiger doesn’t start until February 22 (today week).
Investors will have had time to assess the impact of Friday night’s increase in the reserve deposit ratio.
According to comments on government news websites, the tightening targets the "comparatively loose liquidity" while keeping the "moderately easy" monetary policy unchanged.
