The South Korea stock market on Friday wrote a finish to the three-day losing streak in which it had retreated more than 40 points or 2 percent. The KOSPI settled just below the 2,010-point plateau, and now traders are bracing for renewed selling pressure when the market kicks off trade on Monday.
The global forecast for the Asian markets suggests consolidation, with investors likely locking in gains after rallying on Friday. Concerns from Europe's financial sector add to the cautious sentiment after data showed that Spanish banks stepped up their borrowings from the European Central Bank in March. The European and U.S. markets finished lower, and the Asian bourses are tipped to follow that lead.
The KOSPI finished sharply higher on Friday following gains from the construction stocks and technology shares.
For the day, the index spiked 22.28 points or 1.12 percent to finish at 2,008.91 after trading between 1,996.23 and 2,011.37. Volume was 486 million shares worth 5.07 trillion won. There were 661 gainers and 184 decliners.
Among the gainers, POSCO climbed 2.12 percent, while Hyundai Steel jumped 2.36 percent, Hyundai Heavy Industries spiked 2.48 percent, LG Chem added 0.27 percent, Hyundai Engineering & Construction surged 3.87 percent, Kia Motors collected 1.42 percent and LG Electronics rose 2.24 percent.
The lead from Wall Street is negative as stocks moved sharply lower on Friday, giving back some ground after posting strong gains in the two previous sessions. Renewed concerns about corporate earnings and the global economy contributed to the weakness in the markets.
The pullback was partly due to disappointing economic news out of China, the world's second largest economy behind the U.S. Data released by the Chinese National Bureau of Statistics showed that Chinese economic growth slowed to 8.1 percent in the first quarter from 8.6 percent in the fourth quarter. Economists had expected a more modest slowdown to 8.4 percent.
Traders also reacted negatively to quarterly results from JP Morgan (JPM) and Wells Fargo (WFC), which closed notably lower despite reporting better than expected first quarter earnings.
Additional negative sentiment followed a report from Reuters and the University of Michigan showing an unexpected deterioration in U.S. consumer sentiment in April. The preliminary reading on consumer sentiment in April fell to 75.7 compared to March's final reading of 76.2. Economists had expected the index to come in unchanged on month. A separate report from the Labor Department showed an increase in consumer prices in March that matched economic estimates.
The major averages saw further downside going into the close, ending the session near their worst levels of the day. The Dow slid 136.99 points or 1.1 percent to finish at 12,849.59, while the NASDAQ tumbled 44.22 points or 1.5 percent to end at 3,011.33 and the S&P 500 fell 17.31 points or 1.3 percent to 1,370.26. With the losses on the day and the sell-off earlier in the week, the major averages all posted weekly losses. The Dow fell by 1.6 percent, while the NASDAQ and the S&P 500 dropped by 2.2 percent and 2 percent, respectively.
On the economic front, the Bank of Korea on Friday decided to hold the benchmark interest rate unchanged at 3.25 percent for the 10th straight month. The decision was expected as CPI eased from 3.1 percent in February and now rests on the lower end of the central bank's target range of 2 to 4 percent. The central bank had unexpectedly hiked interest rates by 25 basis points at its June 2011 meeting and left the policy unchanged since then.
by RTT Staff Writer
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