The South Korea stock market on Wednesday wrote a finish to the three-day winning streak in which it had gathered more than 50 points or 2.8 percent. The KOSPI finished just below the 1,845-point plateau, and now analysts are forecasting additional damage at the opening of trade on Thursday.
The global forecast for the Asian markets is broadly negative as the situation in Europe continues to deteriorate, with rising Italian and Spanish bond yields suggesting the possibility that the European debt crisis will continue to spread. Soft economic data from the United States adds to the negative sentiment. The European and U.S. markets finished firmly in the red, and the Asian bourses are expected to open in similar fashion.
The KOSPI finished slightly lower on Wednesday as losses from the technology stocks and oil companies were offset by support from the automobile producers and steel companies.
For the day, the index shed 5.05 points or 0.27 percent to finish at 1,844.86 after trading between 1,828.83 and 1,846.60. Volume was 397 million shares worth 5.07 trillion won. There were 517 decliners and 313 gainers.
Among the decliners, Samsung Electronics shed 0.97 percent, while LG Electronics lost 0.88 percent, LG Chem fell 0.33 percent and SK Innovation retreated 0.69 percent.
Moving higher, Hyundai Motor climbed 2.32 percent, while Kia Motors added 0.77 percent, POSCO jumped 1.12 percent and Hyundai Heavy Industries collected 0.55 percent.
The lead from Wall Street suggests consolidation as stocks showed a substantial move back to the downside on Wednesday after turning in a strong performance in the previous session.
Renewed concerns about the financial situation in Europe contributed to the sharp pullback by the markets. Reports suggested that the European Central Bank had blatantly rejected Spain's plan to recapitalize the troubled lender Bankia using sovereign bonds - although the ECB later denied the report.
Also, an auction of 5 and 10-year Italian debt failed to meet the maximum target and the 10-year borrowing costs breached the 6 percent mark amid rising fears of a contagion from the worsening Spanish banking crisis.
Additionally, a new poll out of Greece showing the anti-bailout Syriza party in the lead in next month's elections also led to renewed concerns about the outlook for the debt-plagued nation.
Disappointing U.S. economic data also weighed, as the National Association of Realtors reported that pending home sales tumbled 5.5 percent to 95.5 in April after rising 3.8 percent to a downwardly revised 101.1 in March. Economists had expected pending home sales to edge up by 0.5 percent.
Among individual stocks, Pep Boys (PBY) posted a substantial loss after the auto parts retailer announced the termination of its proposed merger with Gores Group. BlackBerry maker Research in Motion also came under pressure after saying it now expects to report an operating loss for its first quarter.
The major averages posted steep losses on the day, offsetting Tuesday's gains as the Dow fell 160.83 points or 1.3 percent to finish at 12,419.86, while the NASDAQ dropped 33.63 points or 1.2 percent to end at 2,837.36 and the S&P 500 slid 19.10 points or 1.4 percent to 1,313.32.
In economic news, South Korea posted a current account surplus of $1.78 billion in April, the Bank of Korea said on Wednesday, holding in the black for the third straight month.
That follows the $3.04 billion surplus in March, the $0.64 billion surplus in February and the $772 million deficit in January. The January shortfall was the country's first current account deficit in two years.
The goods account surplus narrowed to $1.8 billion from $2.93 billion in the previous month due to a slowdown of exports, notably those of petroleum products and semiconductors, the central bank said.
by RTT Staff Writer
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