The South Korea stock market has closed lower now in two straight sessions, falling more than 20 points or 1 percent along the way. The KOSPI finished just above the 1,985-point plateau, and now investors are expected to go bargain hunting when the market kicks off trade on Wednesday.
The global forecast for the Asian markets is broadly positive, thanks to encouraging signs of health for the global economy. The International Monetary Fund raised its global growth projections for this year and next, citing improvements in the U.S. economy and emerging economies. Also positive was Tuesday's successful Spanish debt auction, in which Spain sold 3.2 billion euros worth of twelve and eighteen-month bills. The European and U.S. markets finished sharply higher and the Asian bourses are expected to follow suit.
The KOSPI finished modestly lower on Tuesday as losses from the technology stocks and steel producers were offset by support from the shipbuilders.
For the day, the index shed 7.33 points or 0.37 percent to finish at 1,985.30 after trading between 1,982.44 and 1,999.50. Volume was 439 million shares worth 3.92 trillion won. There were 416 decliners and 390 gainers.
Among the decliners, Samsung Electronics lost 0.79 percent, while Hyundai Steel gave away 1.87 percent, LG Chem fell 1.66 percent, Hyundai Motor retreated 1.52 percent and Kia Motors lost 0.63 percent.
Bucking the trend, LG Electronics added 0.92 percent, while Hyundai Heavy Industries climbed 0.81 percent and Daewoo Engineering and Construction collected 0.20 percent.
The lead from Wall Street is upbeat as stocks moved sharply higher on Tuesday as traders reacted positively to news out of Europe and the latest batch of quarterly results.
The rally followed a successful Spanish debt auction. Spain sold 3.2 billion euros worth of twelve and eighteen-month bills, above the target of 3 billion euros. While the yields were well above last month, the auctions attracted improved demand. The results of the bond auctions contributed to a drop in Spanish bond yields and offset some of the recently renewed concerns about the European debt crisis.
Upbeat earnings news also generated positive sentiment, with shares of Coca-Cola (KO) rising by 2.1 percent after the beverage giant reported first quarter earnings that rose to $0.89 per share from $0.82 per share in the same quarter a year ago, beating estimates for $0.87 per share.
Goldman Sachs (GS) also reported better than expected first quarter earnings and announced an increase in its quarterly dividend to $0.46 per share. While Johnson & Johnson (JNJ) also reported stronger than expected earnings growth, the healthcare giant reported a modest drop in sales.
Meanwhile, traders largely shrugged off disappointing U.S. economic data, including a Commerce Department report showing that housing starts fell 5.8 percent to an annual rate of 654,000 in March from the revised February estimate of 694,000. Economists had expected starts to rise to an annual rate of 700,000.
Also, the Commerce Department said building permits rose 4.5 percent to an annual rate of 747,000 in March from the revised February rate of 715,000. With the increase, building permits rose to their highest level since September of 2008. A separate report from the Federal Reserve showed that industrial production unexpectedly came in unchanged for the second consecutive month in March.
The major averages moved roughly sideways going into the close, ending the session near their best levels of the day. The Dow jumped 194.13 points or 1.5 percent to finish at 13,115.54, while the NASDAQ soared 54.42 points or 1.8 percent to end at 3,042.82 and the S&P 500 surged 21.21 points or 1.6 percent to 1,390.78.
On the economic front, Bank of Korea Governor Kim Choong Soo said that additional monetary easing by world's major central banks may hurt emerging economies and urged them to absorb excess liquidity from the market.
In a speech at Goethe University in Germany, he said "further monetary easing could do more harm than good when the financial markets are already flooded with cheap liquidity but remain nonetheless timid in their lending to the private sector."
Advanced economies should strive for fiscal balance while central banks in these countries need to take steps to retrieve excess liquidity in the market, he said.
by RTT Staff Writer
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