The South Korea stock market has closed lower now in six straight sessions, falling almost 1300 points or 6.8 percent along the way. The KOSPI finished just below the 1,840-point plateau, and now traders are bracing for continued selling pressure when the market kicks off trade on Thursday.
The global forecast for the Asian markets remains negative, although they have taken heavy losses in recent sessions and are ripe for bargain hunting later in the day. The political situation in Greece remains the main culprit amid doubts regarding the country's international aid and rekindling worries that Greece could exit from the euro currency bloc. Providing support is better than expected U.S. economic data for industrial production and housing starts. The European and U.S. markets were lower again, and the Asian bourses are expected to open in similar fashion.
The KOSPI finished sharply lower on Wednesday following heavy damage from the technology stocks, automobile producers and steel companies.
For the day, the index plunged 58.43 points or 3.08 percent to finish at 1,840.53 after trading between 1,840.23 and 1,889.29.
Among the decliners, Samsung Electronics plummeted 6.18 percent, while Hyundai Motor plunged 3.99 percent and POSCO shed 2.23 percent.
The lead from Wall Street continues to be negative as stocks moved lower on Wednesday after failing to sustain an early upward move. The pullback came as worries about the political situation in Greece once again overshadowed a batch of upbeat U.S. economic data.
The downturn by the markets was partly due to reports indicating that the European Central Bank has stopped monetary policy operations with some Greek banks. A separate report cited two euro-area officials who said that the ECB has no plans to increase stimulus, adding to the selling pressure.
Stocks saw continued weakness following the release of the minutes of the Federal Reserve's April meeting, which showed that members of the Federal Open Market Committee remain divided on the prospects for a third round of quantitative easing. The minutes said "several" members are in favor of additional asset purchases if the economic recovery falters, up from "a few" potential advocates for QE3 a month earlier.
The early strength was due to some better than expected U.S. economic data, including a report from the Federal Reserve showing a much bigger than expected increase in industrial production in April. Output increased 1.1 percent in April, topping estimates for an increase of 0.5 percent.
Additionally, the Commerce Department reported that U.S. housing starts rose 2.6 percent to an annual rate of 717,000 in April from the revised March estimate of 699,000. Economists had expected housing starts to increase to 690,000 from the 654,000 originally reported for March. Also, building permits fell 7.0 percent to an annual rate of 715,000 in April from the revised March rate of 769,000.
The major averages all were near their worst levels of the day as the Dow slipped 33.45 points or 0.3 percent to finish at 12,598.55, while the NASDAQ fell 19.72 points or 0.7 percent to end at 2,874.04 and the S&P 500 dropped 5.86 points or 0.4 percent to 1,324.80. The losses extended a recent downward move by the major averages, with the Dow hitting a nearly four-month closing low, while the NASDAQ and the S&P 500 set new three-month lows.
In economic news, South Korea's unemployment rate declined slightly in April, Statistics Korea said on Wednesday, falling to 3.5 percent from 3.7 percent in March and 4.2 percent in February. In April last year, the rate was 3.7 percent. The number of unemployed fell 4.4 percent year-on-year to 41,000. The employment rate was 59.7 percent in April.
by RTT Staff Writer
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