The Hong Kong stock market has alternated between positive and negative finishes through the last five trading days since the end of the three-day winning streak in which it had spiked almost 500 points or 2.7 percent. The Hang Seng Index finished just above the 18,800-point plateau, and now traders are looking for renewed support when the market kicks off trade on Friday.
The global forecast for the Asian markets is cautiously optimistic, albeit with a limited upside ahead of this weekend's critical vote in Greece and in spite of more depressing news from Spain. But the bad news has also prompted optimism as global central banks are reportedly preparing for further financial stimulus. The European markets were mixed on Thursday and the U.S. bourses were firmly higher - and the Asian markets are expected to split the difference.
The Hang Seng finished sharply lower on Thursday following losses from the property stocks and retailers, among others.
For the day, the index plummeted 218.12 points or 1.15 percent to finish at 18,808.40 after trading between 18,795.65 and 18,937.54 on volume of 38.25 billion Hong Kong dollars.
Among the actives, Esprit plunged 12.4 percent, while China Overseas Land fell 1.5 percent and China Resources Land lost 1.7 percent.
The lead from Wall Street is firmly positive as stocks saw considerable volatility in the final hour of trading on Thursday, after moving higher in the morning. The markets managed to end the day on the upside amid optimism about the likelihood of further stimulus.
The late volatility followed a report from Reuters indicating that central banks from major economies are prepared to take necessary steps to stabilize the financial markets after the Greek elections on Sunday.
Traders also reacted to remarks by U.K. Chancellor George Osborne, who said the U.K. Treasury and the Bank of England will take "coordinated action" to protect the economy from the eurozone crisis.
Earlier in the day, the markets benefited when the Labor Department reported an unexpected increase in initial jobless claims in the week ended June 9. Jobless claims rose to 386,000 from the previous week's revised figure of 380,000, while economists had expected jobless claims to edge down to 375,000 from the 377,000 originally reported for the previous week.
While the report points to continued sluggishness in the labor market, the data led to optimism regarding the likelihood of further stimulus from the Federal Reserve.
Also, the Labor Department said that consumer prices fell by 0.3 percent in May after coming in unchanged in April. The slightly steeper than expected drop was largely due to a 4.3 percent decrease in energy prices. Core consumer prices, which exclude food and energy prices, rose 0.2 percent in May, matching the increases seen in the two previous months and in line with estimates.
Traders also digested news that Moody's cut its rating on Spanish government debt to Baa3 from A3, driving Spanish bond yields to euro-era record highs.
The major averages all ended the day in positive territory, offsetting the losses posted in the previous session. The Dow jumped 155.53 points or 1.2 percent to finish at 12,651.91, while the NASDAQ rose 17.72 points or 0.6 percent to end at 2,836.33 and the S&P 500 climbed 14.22 points or 1.1 percent to 1,329.10.
In economic news, Hong Kong's producer price inflation for the manufacturing sector slowed in the first quarter, the Census and Statistics Department said on Thursday. The output price index increased 3.6 percent year-on-year in the first quarter, notably slower than the 6.6 percent growth seen in the fourth quarter.
by RTT Staff Writer
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