Hong Kong market still rising Floods continue to weigh on Australian shares

The Hang Seng index continued its rally on the Wednesday, gaining another 192 points at midday trade, following encouraging leads from offshore market.

Investor confidence has improved on the back of easing fears on European debt concerns, particularly after news that Japan and China may participate in buying European bonds.

Energy and basic material sectors led the gains after commodity prices rose overnight. Crude oil price closed 2.08% higher at US$91.11. March copper price also gained 1.98%.

China Petrol and CNOOC gained over 1.5% before midday while China Coal Energy Co (1898.HK) gained nearly 2% to HKD3.75.

In Singapore, the Straits Times index was down at midday with financial stocks dragging the market down. OCBC Bank and DBS Banking Group fell 1.17% and 0.14% respectively while Genting Singapore and Wilmar gained 0.92% and 0.889% before lunch break.

Straits Asia Resource was in focus today, gaining 7.58% to SGD2.84 after the Indonesian government granted the company a permit to boost its mining production capacity.

In Australia, the impact of floods in Queensland continued to weigh on the local share market with oil refining company Caltex losing 6 per cent on today’s trading.

The picture being painted by some quarters (including the Reserve Bank of Australia’s statement) seem dire at the moment. We need a lot more positive news and development for the local market to turn up or to sustain a rise at this stage.

Caltex said the closure of one of its refineries in the flood affected Queensland will cost approximately $5-10 million dollars. Investors are keeping an eye out for those companies that are mostly affected or to be affected by the flood.

The Aussie dollar also remains under pressure. Though it has recovered quite a bit from its lows overnight and is holding its ground above the US$0.9850 level, we may see it range trading in the short term.