Ahead of Wednesday's holiday for Tomb Sweeping Day, the Hong Kong stock market had ended the four-day slide in which it had plummeted more than 530 points or 2.6 percent. The Hang Seng Index finished just above the 20,790-point plateau, although now analysts are predicting heavy damage at the opening of trade on Thursday as the market catches up on some negative sentiment.
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 Hang Seng finished sharply higher on Tuesday following gains from the property stocks and resource plays.
For the day, the index surged 268.72 points or 1.31 percent to finish 20,790.98 after trading between 20,588.20 and 20,816.09 on volume of 63.14 billion Hong Kong dollars.
Among the actives, China Overseas Land surged 5.3 percent, while China Resources Land spiked 5.1 percent, Country Garden soared 4.2 percent, Sun Hung Kai Properties collected 2.0 percent, Chalco added 1.1 percent and Kunlun Energy shed 3.1 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.
In economic news, China is on Thursday scheduled to release the March reading for the HSBC Services PMI. The PMI showed a score of 53.9 in February, with a score over 50 signaling expansion and a score below indicating contraction.
Also, Chinese Premier Wen Jiabao has urged state-owned banks to end their "monopoly" in lending, to allow freer flow of capital to the country's private sector. The country's state-owned banks are making money "too easily," he said in comments posted on the website of China National Radio on Wednesday.
Because of a few big lenders' monopoly, one can only go to them for loans, the media reported Wen as saying. Thus it is hard for businesses to raise necessary capital and the government is working on getting private capital into the finance sector. "We have to break up their monopoly," he said.
by RTT Staff Writer
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