More pain for Asian stocks; Australian central bank keeps rates on hold

<p>Asian stocks were lower, as expected, following very weak overnight leads. The extent of the declines was slightly worse than expected, except for the Australian […]</p>

Asian stocks were lower, as expected, following very weak overnight leads. The extent of the declines was slightly worse than expected, except for the Australian market which gained on favourable macro news.

The MSCI Asia Pacific Index sank 2.1% in late Tokyo trading, set for its lowest close since July 2009. Standard & Poor’s 500 futures added only 0.2% after a two-day drop.

Despite all the gloom, Australia’s exports surged in August to a record A$28.4 billion improved on coal shipments. The nation’s A$3.1 billion trade surplus was the second-widest on record.

A separate release showed the number of permits granted to build or renovate houses and apartments jumped 11.4 percent from July, the biggest increase since March 2010 but admittedly from already depressed levels.

The Australian dollar fell after the central bank kept rates steady but opened the door for a rate cut should demand face further pressures. The A$ dropped to the lowest since September 2010 against its U.S. counterpart after the Reserve Bank cited very unsettled global financial markets and signs of weaker domestic growth.

Commodity prices were flat in late afternoon Asian trading. Copper seems to be finding a floor around current levels of US$3.00-3.10 but there could be more downside should global growth concerns continue. A copper price at current levels, although significantly off highs above US$4, is still strong by historical levels. Uranium is also holding above US$52/lb despite other energy prices, notably oil, moderating on growth concerns. Again, uranium is coming off a much lower base.

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