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KOSPI May Face Continued Selling Pressure

4/19/2012 7:29 PM ET

The South Korea stock market headed south again on Thursday, one session after it had halted the two-day losing streak in which it had declined more than 20 points or 1 percent. The KOSPI finished just below the 2,000-point plateau, and now analysts are forecasting further damage at the opening of trade on Friday.

The global forecast for the Asian markets suggests consolidation following a disappointing batch of U.S. economic data. Adding to the cautious outlook, Spain saw strong demand for its debt during an auction on Thursday, but borrowing costs continued to rise amid increasing concerns that the country may be forced to seek a bailout. The downside may be limited by better than expected quarterly earnings - particularly among the financials. The European markets finished mixed and the U.S. bourses were down - and the Asian markets figure to split the difference.

The KOSPI finished slightly lower on Thursday as losses from the financial shares and the oil companies were tempered by support from the technology sector.

For the day, the index lost 4.67 points or 0.23 percent to finish at 1,999.86 after trading between 1,994.61 and 2,008.82. Volume was 406.8 million shares worth 4.03 trillion won.

Among the actives, SK Innovation shed 3.8 percent, while S-Oil dropped 4.2 percent, Hana Financial Group fell 2.2 percent, Shinhan Financial lost 2 percent, KT Corp retreated 1.7 percent, Samsung Electro Mechanics climbed 2.5 percent and Samsung Electronics added 0.5 percent.

The lead from Wall Street remains negative as stocks moved lower on Thursday after seeing considerable volatility in morning trade. Largely disappointing U.S. economic data weighed on the markets, offsetting positive sentiment from upbeat banking earnings.

Traders were disappointed by a slew of U.S. economic data, including a Labor Department report showing that jobless claims came in well above estimates in the week ended April 14. While jobless claims edged down to 386,000 from the previous week's revised figure of 388,000, analysts had expected 365,000.

Also, the National Association of Realtors reported an unexpected drop in existing home sales in March. Existing home sales fell 2.6 percent to an annual rate of 4.48 million in March from an upwardly revised 4.60 million in February. Economists had expected sales to edge up to 4.62 million.

The Philadelphia Federal Reserve also reported that its index of regional manufacturing activity fell to 8.5 in April from 12.5 in March, although a positive reading still indicates growth. Economists had expected the index to edge down to a reading of 12.0.

Meanwhile, traders largely shrugged off a separate report from the Conference Board showing that its leading economic index for the U.S. increased for the sixth consecutive month in March.

The disappointing economic data overshadowed better than expected first quarter earnings from financial giants Bank of America (BAC) and Morgan Stanley (MS).

The major averages climbed off their worst levels going into the close but remained firmly negative. The Dow dropped 68.65 points or 0.5 percent to finish at 12,964.10, while the NASDAQ fell 23.89 points or 0.8 percent to end at 3,007.56 and the S&P 500 slid 8.22 points or 0.6 percent to 1,376.92.

by RTT Staff Writer

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