The Hong Kong stock market has closed lower now in back-to-back sessions, giving away more than 375 points or 2 percent en route to a five-month closing low. The Hang Seng Index finished just above the 18,665-point plateau, and now investors are likely to go hunting for bargains when the market kicks off trade on Friday.
The global forecast for the Asian markets is cautiously optimistic, thanks to good news from Europe that was somewhat conditional. Wednesday's EU summit resulted in the clear message that their leaders want Greece to remain in the euro area - but German Chancellor Angela Merkel reinforced her opposition to the idea of issuing eurobonds at the summit. The European markets were higher and the U.S. bourses were mixed but little changed, and the Asian markets figure to split the difference.
The Hang Seng finished modestly lower on Thursday following losses from the oil companies.
For the day, the index dropped 119.79 points or 0.64 percent to finish at 18,666.40 after trading between 18,654.76 and 18,835.81.
Among the actives, PetroChina shed 0.6 percent, while China Shenhua Energy lost 1.3 percent, China Railway jumped 2.4 percent and Anhui Conch Cement climbed 2.7 percent in Hong Kong.
Wall Street provides little clarity as stocks showed a lack of direction on Thursday, as traders seemed reluctant to make any significant moves. The choppy trading came after the markets saw considerable volatility over the course of the two previous sessions.
While some analysts have described the markets as oversold in light of the recent weakness, traders appear reluctant to go bargain hunting amid continued concerns about the financial situation in Europe.
European leaders have voiced their strong desire for Greece to remain in the eurozone and honor its commitments under previously agreed bailout deals that require the implementation of reforms and unpopular austerity measures. There are also hopes that the new Greek government that emerges from next month's general elections will implement the reforms and measures needed to bring the crisis-hit nation back on the road to progress.
Traders also digested some uninspiring U.S. economic data as the Commerce Department reported that orders for non-defense capital goods excluding aircraft, which are seen as an indicator of capital spending, fell by 1.9 percent in April following a 2.2 percent drop in March. The data was included in the report on durable goods orders in April, which showed a mild increase in orders amid a rebound in transportation equipment orders.
A separate report from the Labor Department showed a modest decrease in initial jobless claims in the week ended May 19. Jobless claims edged down to 370,000 from the previous week's revised figure of 372,000.
Among individual stocks, Hewlett-Packard (HPQ) rose by 3.3 percent after reporting better than expected second quarter results and raising its full year adjusted earnings guidance. Shares of Pandora Media (P) also showed a strong upward move after the online radio service reported a narrower than expected first quarter loss and provided upbeat guidance.
Meanwhile, shares of Tiffany (TIF) came under pressure after the luxury goods retailer reported weaker than expected first quarter earnings and slashed its full year guidance.
In economic news, Hong Kong's merchandise exports increased 5.6 percent year-on-year to HK$266.3 billion in April, the Census and Statistics Department said on Thursday. Economists were looking for a 6.2 percent annual increase. In March, the value of dispatches fell 6.8 percent annually. Compared to March, total shipments increased 1.6 percent.
Imports advanced 5 percent from last year to HK$309.1 billion in April - faster than the 4.1 percent growth economists forecast. On a monthly basis, arrivals edged up 0.9 percent. The trade deficit increased slightly to HK$42.87 billion from HK$42.44 billion a year earlier. In March, the trade balance was a deficit of HK$43.88 billion.
Also, China's manufacturing activity contracted at a faster pace in May, preliminary survey results from Markit Economics showed on Thursday. The flash purchasing managers' index for the manufacturing sector fell to 48.7 in May from 49.3 in April. A PMI reading below 50 suggests contraction. Meanwhile, the manufacturing output index returned to positive territory, rising to 50.5 from 49.3 in the previous month.
In corporate news, China Kanghui Holdings (KH) reported that its first-quarter net income was RMB29.7 million or $4.7 million, representing a year-over-year increase of 35.0 percent from RMB22.0 million a year earlier. On a per ADS basis, the company reported net income per ADS of RMB1.15 or $0.18 in the first quarter of 2012, compared to a net income per ADS of RMB0.87 last year.
by RTT Staff Writer
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