Asian stocks may take a breather in coming sessions after two straight weeks of gains as investors remain cautious amid persistent worries about fallout from the global credit squeeze.
But the markets can grind higher on the back of still positive fundamentals including strong profit growth. The market is still torn between fair valuation and sustainable growth versus risks and currently it is still the former that is winning. On the short-term, we are looking for a recovery in the equity markets.
Asian markets are likely to start the week on an upbeat note after U.S. President George W. Bush and Federal Reserve Chairman Ben Bernanke reassured investors on Friday that they would do what was needed to shelter the world's largest economy from market turmoil.
The comments sent key U.S. benchmark indexes up by around 1 percent.
But trade in the first part of the week may be subdued as U.S. markets will be closed on Monday for the Labor Day holiday, and as nervous investors watch for signs of any further deterioration in the U.S. housing and consumer markets. On Wed, construction numbers in July would be due, and expect it to dissapoint Wall street.
I would cash out some Asian securities this week, at least the ones that made money for you. Be patient and look for entry points in the coming weeks. This market is still volatile, and patience is the key.
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