The South Korea stock market on Wednesday wrote an emphatic finish to the three-day winning streak in which it had climbed almost 35 points or 1.9 percent. The KOSPI finished just below the 1,795-point plateau, and now investors are looking to reverse the market's losses when it kicks off trade on Thursday.
The global forecast for the Asian markets is cautiously optimistic following solid economic data from the United States. The Commerce Department reported a bigger than expected rebound in housing starts in the month of June. In addition, the Fed's Beige Book report said overall economic activity continued to expand at a modest to moderate pace in June and early July. The European and U.S. markets finished higher, and the Asian bourses are expected to follow that lead.
The KOSPI finished sharply lower on Wednesday following losses from the technology stocks, shipbuilders and financial shares.
For the day, the index plummeted 27.05 points or 1.48 percent to finish at 1,794.91 after trading between 1,790.36 and 1,827.95. Volume was 448.5 million shares worth 4.4 trillion won. There were 658 decliners and 169 gainers.
Among the decliners, Samsung Electronics shed 1.2 percent, while SK Hynix dropped 4.93 percent, Hyundai Heavy Industries slipped 4.19 percent and Shinhan Financial Group retreated 2.13 percent.
The lead from Wall Street is positive as stocks moved higher on Wednesday, adding to the gains posted in the previous session. The markets benefited from considerable strength that emerged among technology stocks - which moved sharply higher despite disappointing guidance from semiconductor giant Intel (INTC).
Intel reported better than expected Q2 earnings after the close of trading on Tuesday, but the company also reported weaker than expected revenues and lowered its full year revenue growth outlook. Tech stocks also benefited from bargain hunting following recent weakness in the sector, with the gain by Intel extending a recovery from the six-month closing low it set last Thursday.
In addition, the Commerce Department reported that housing starts jumped 6.9 percent to an annual rate of 760,000 in June from the revised May estimate of 711,000. Economists had expected starts to climb to 745,000 from the 708,000 originally reported for the previous month. On the other hand, building permits, an indicator of future housing demand, fell by 3.7 percent to an annual rate of 755,000 in June from the revised May rate of 784,000.
In other economic news, the Fed's Beige Book report said overall economic activity continued to expand at a modest to moderate pace in June and early July. The report also said employment levels grew at a tepid pace since the last report and noted that price inflation was modest across most areas of the country. Looking ahead, the Fed said contacts remained cautiously optimistic about future business conditions.
Traders also kept an eye on Federal Reserve Chairman Ben Bernanke's second day of testimony on Capitol Hill, with the Fed Chief facing questions from the House Financial Services Committee. Bernanke's prepared remarks were unchanged from those he delivered to the Senate Banking Committee on Tuesday. He reiterated that the Fed is prepared to take further action if necessary and continued to urge Congress to address the upcoming fiscal cliff.
The major averages hovered firmly in positive territory in afternoon trading, holding on to strong gains. The Dow rose 103.16 points or 0.8 percent to finish 12,908.70, while the NASDAQ jumped 32.56 points or 1.1 percent to end at 2,942.60 and the S&P 500 climbed 9.11 points or 0.7 percent to 1,372.78.
by RTT Staff Writer
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