The South Korea stock market on Wednesday halted the modest two-day winning streak in which it had risen almost 35 points or 1.7 percent. The KOSPI finished just below the 2,020-point plateau, and now investors are bracing for further damage when the market kicks off trade on Thursday.
The global forecast for the Asian markets remains sharply negative on renewed concerns for a global recession. The European Central said the region's economy is likely to have entered a recession in the first quarter amid lingering concerns over the sovereign debt crisis. Also potentially weighing on investors were a disappointing Spanish bond auction and a weaker than expected reading on U.S. service sector. Gold stocks are expected to plunge, along with steel, finance and technology shares. The European and U.S. markets finished firmly in the red, and the Asian markets are tipped to follow suit.
The KOSPI finished sharply lower on Wednesday following losses from the telecoms and brokerages.
For the day, the index plummeted 30.57 points or 1.50 percent to finish at 2,018.61 after trading between 2,015.57 and 2,048.11 on volume of 607.2 million shares. There were 693 decliners and 153 gainers.
Among the decliners, Samsung Engineering plunged 5.3 percent, while Daewoo Shipbuilding and Marine Engineering shed 4.9 percent, Woori Investment and Securities lost 3.8 percent, Daewoo Securities fell 4.4 percent, SK Telecom dropped 3.2 percent, Samsung Electronics retreated 1.1 percent and Hyundai Motor eased 0.6 percent.
The lead from Wall Street remains unfriendly as stocks saw considerable weakness on Wednesday, extending the downward move seen in the previous session. The selloff reflected continued disappointment with the minutes of the latest Federal Reserve meeting as well as lingering concerns about the global economy.
The weakness came as traders continued to react to the minutes of the latest Fed meeting, which seemed to indicate that the central bank is not likely to engage in any further quantitative easing. The latest minutes said only "a couple of members" indicated that additional stimulus could become necessary, while the minutes of the January meeting said "a few members" believed that conditions could warrant additional securities purchases.
A disappointing Spanish bond auction and a weaker than expected reading on U.S. service sector activity also generated some selling pressure. The Institute for Supply Management reported that its index of activity in the service sector fell to 56.0 in March from 57.3 in February. While a reading above 50 still indicates growth in the service sector, economists had been expecting a reading of 57.0.
On the other hand, payroll processor Automatic Data Processing (ADP) reported continued job growth in the U.S. private sector. Employment increased by 209,000 jobs in March following an upwardly revised increase of 230,000 jobs in February. Economists had expected an increase of about 208,000 jobs compared to the addition of 216,000 jobs originally reported for the previous month.
In corporate news, Yahoo (YHOO) confirmed that it will lay off about 2,000 employees, or 14 percent of its global workforce, as it revamps itself into a slimmer company.
The major averages ended the session well off their worst levels of the day but still closed firmly in the red. The Dow fell 124.80 points or 1 percent to finish at 13,074.75, while the NASDAQ plunged 45.48 points or 1.5 percent to end at 3,068.09 and the S&P 500 dropped 14.42 points or 1 percent to 1,398.96.
by RTT Staff Writer
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