Stocks brace for fallout from Wall Street's latest jitters over inflation

ASIAN stock markets are expected to fall today after strong employment growth in the United States sparked fears that interest rates will rise, probably as early as next month. Stronger than expected May non-farm payrolls triggered an 85-point drop on Wall Street at one stage on Friday before the Dow Industrial Average recovered to close 30 points up on short-covering. Brokers said equities investors were now focusing on the US producer prices report due on Tuesday and consumer prices report on Wednesday for further guidance on inflation prospects. AUSTRALIA THE Australian market is seen cautiously firmer in the near term although still susceptible to negative offshore developments, especially in metals markets. One broker said: 'Leads from the US will determine the start to the week. I think maybe the market will be a little firmer.' The market will be closed tomorrow for a public holiday. The All Ordinaries Index finished at 2,220.1, down 46 points on the week. BANGKOK STOCKS are expected to remain sluggish as investors wait for a clearer picture of the political scene after one party threatened to quit the coalition government, brokers said. The index is expected to move in a tight range, with the 1,300-point mark seen as the strong resistance level. On Friday the index closed at 1,284.34 points, down from 1,311.91 on Thursday of the previous week, the Friday having been a holiday. BOMBAY FOREIGN institutional appetite for Indian blue-chip shares is seen pushing the exchange, boosted by assurances that the new government will continue reforms. Strong corporate results and expected good monsoon rains are other factors seen as aiding a surge. In the week to Friday, the 30-share Bombay Stock Exchange Sensitive Index leapt 141.24 points to 3,866.21, compared with its close of 3,729.74 a week earlier. JAKARTA Share prices are likely to be mixed in the coming week as market sentiment remains weak. 'Three firms are expected to be listed this week, and if this takes place as scheduled, investors who have been staying out are likely to return,' one broker said. The Jakarta Composite Index closed 0.45 points lower at 612.76 points on Friday, against 617.47 points a week earlier. KUALA LUMPUR EXPECTATIONS of firmer interest rates may set the market back further. J.M. Sassoon economist Liew Yin Sze said: 'Bank Negara is obviously in a tightening mode. You can kiss the stock market goodbye for a while.' The Kuala Lumpur Stock Exchange Composite Index ended on Friday at 1,131.67 points, against 1,141.07 a week earlier. MANILA MANILA shares are expected to rise as the market extends Friday's buying spree, but profit-taking could arise later in the week, traders say. Tien Doe at Morgan Grenfell Securities said: 'At the start of the week, there could be some spillover from Friday, as there are still orders that have to be filled.' The main index closed at 3,273.11 points on Friday, up 22.85 points from 3,250.26 the previous Friday. SEOUL PRICES closed up 0.5 per cent on the Korea Stock Exchange in yesterday's trading in an apparent upward correction, brokers say. Han Ki-Shin, of Coryo Securities Co, said: 'The market seems to be undergoing upward corrections after falling two days in a row.' The Composite Index closed at 903.32 points, up 4.5 points, according to initial figures. The Composite Index ended at 907.83 on Friday, up 4.74 points from the previous Friday. Consolidation might be the watchword in the market this week as weakening economic fundamentals, including slowing exports, eroded investor confidence, brokers said. SINGAPORE The benchmark Straits Times Industrials Index is expected to be bogged down in the week ahead by the absence of fresh fund-buying interest in the market. 'The market is pretty unattractive now as it is quite fully valued,' one institutional dealer said, adding that the ST index was unlikely to make major gains until fresh funds entered the market. On Friday, the index closed up 4.04 at 2,338.30 compared with 2,332.91 on Thursday of the previous week, the Friday having been a holiday. TAIPEI PRICES in Taiwan finished 0.2 per cent higher yesterday in the fourth straight winning session. Chiang Cheng-hsun, of Full Sun Securities Co, said: 'Investors are returning to the market, but some chose to release shares after a short-term investment to avoid risks.' The Taiwan Stock Exchange weighted price index rose 12.68 points to 6,109.22. Turnover was 1.48 billion shares worth NT$49.57 billion. On Friday the index ended at 6.096.54 points against 5,966.82 a week earlier. Share prices are expected to consolidate this week on hopes that the new cabinet will take measures to boost the economy, brokers say. A range of 6,080-6,150 is expected this week. TOKYO STOCKS are likely to stay range-bound with a weaker bias after moving in a narrow 500-point range, limited by selling on recovery and profit-taking, traders say. On Friday, the Bank of Japan issued a better than expected corporate sentiment survey. Traders said continuing worries over declines of speculative issues and a higher money market rate following the survey were likely to hurt sentiment. The Nikkei-225 ended down 52.65 points at 21,751.81 on Friday, just below the 21,956.19 of a week earlier. WELLINGTON CONCERNS about high bond yields, the forthcoming election and a declining New Zealand dollar could linger. Tim Koller, of Hendry Hay McIntosh, said any sparkle in the coming week would be stock-specific. The power sector had drawn a lot of interest and it had some better-performing stocks. The NZSE-40 Capital Index ended at 2,025.14, down 20 points from the previous week.