The South Korea stock market turned lower again on Thursday, one session after it had ended the three-day losing streak in which it had given away almost 30 points or 1.5 percent. The KOSPI finished just above the 1,905-point plateau, and now analysts are predicting continued selling pressure at the opening of trade on Friday.
Caution is the word of the day for the Asian markets, ahead of Federal Reserve Chairman Ben Bernanke's remarks at the Kansas City Fed's Jackson Hole symposium later in the day. Traders are hoping that Bernanke will make comments indicating whether the central bank will engage in another round of quantitative easing. Adding to the cautious sentiment, the U.S. Labor Department reported that jobless claims failed to improve last week, as was expected. The European and U.S. markets were down, and the Asian bourses are expected to follow that lead.
The KOSPI finished sharply lower on Thursday following heavy damage among the technology stocks and oil companies.
For the day, the index plummeted 22.16 points or 1.15 percent to finish at 1,906.38 after trading between 1,897.07 and 1,922.82. There were 529 decliners and 290 gainers.
Among the actives, Samsung Electronics dropped 1.2 percent, SK Innovation plunged 4.3 percent and Oil shed 2.8 percent, while Hyundai Motor was flat and Halla Climate Control climbed 2.7 percent and Mando added 0.3 percent.
The lead from Wall Street is soft as stocks saw notable weakness on Thursday after turning in a lackluster performance over the three previous sessions. Uncertainty ahead of Bernanke's speech contributed to the weakness on Wall Street.
A research note from Capital Economics said: "Given the unexpectedly strong signal in the minutes of the latest FOMC meeting that QE3 is coming fairly soon, we expect that Fed Chairman Ben Bernanke will reinforce the case for more action in his speech at Jackson Hole."
Further selling pressure was generated by a report that Spanish Prime Minister Mariano Rajoy said his government will delay deciding whether to seek a sovereign bailout until the aid conditions are clear.
On the economic front, the Labor Department reported that jobless claims unexpectedly came in unchanged in the week ended August 25. Initial jobless claims came in at 374,000, unchanged compared to the previous week's revised figure. Economists had expected jobless claims to edge down to 370,000 from the 372,000 originally reported.
A separate report from the Commerce Department showed that personal income rose by 0.3 percent in July, matching the increases in the two previous months and in line with economist estimates. The report also showed that personal spending increased by 0.4 percent in July after coming in flat in June - also as expected.
The major U.S. averages were down on Thursday as the S&P 500 fell 11.01 points or 0.8 percent to finish at 1,399.48, while the Dow slid 106.77 points or 0.8 percent to end at 13,000.71 and the NASDAQ dropped 32.48 points or 1.1 percent to close at 3,048.71.
In economic news, South Korean manufacturers' outlook on business conditions for September improved after easing for three consecutive months. The corresponding index rose by 5 points to 75 in September, a survey from Bank of Korea showed Thursday. Nonetheless, a reading below 100 indicates pessimists outnumber optimists.
The business conditions in manufacturing edged up by 1 point to 72 in August, while that in non-manufacturing slipped by 1 point to 66. The outlook index for non-manufacturers remained unchanged at 69 in September. The survey was conducted among 2,862 companies between August 16 and 23. The economic sentiment index, a composite of the BSI and the consumer survey index was 90 for August, down 2 points from July.
by RTT Staff Writer
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