The Hong Kong stock market has closed lower in two of three trading days since the end of the two-day winning streak in which it had surged more than 700 points or 3.7 percent. The Hang Seng Index finished just above the 19,800-point plateau, and now investors are bracing for continued consolidation when the market kicks off trade on Monday.
The global forecast for the Asian markets is negative, in reaction to the disappointing U.S. employment report for June. Adding to the negative sentiment, International Monetary Fund Managing Director Christine Lagarde said on Friday that the global economic outlook has become more worrisome over the past few months. Another cause for concern is the increase in the yield of 10-year Spanish government bonds back above the 7 percent level. The European and U.S. markets were down on Friday, and the Asian markets are expected to open in similar fashion.
The Hang Seng finished flat on Friday as losses from the financial shares were offset by gains in the property sector.
For the day, the index eased 8.49 points or 0.04 percent to finish at 19,800.64 after trading between 19,690.64 and 19,839.12 on turnover of 48.96 billion Hong Kong dollars.
Among the actives, HSBC shed 0.73 percent, while Industrial and Commercial Bank of China shed 0.70 percent, China Construction Bank dropped 2.65 percent, Bank of China fell 1.03 percent, China Resources Land surged 4.82 percent and China Resources Land jumped 1.0 percent.
The lead from Wall Street suggests consolidation as stocks saw significant weakness on Friday following disappointing employment data that added to recent concerns about the economic outlook. The markets extended Thursday's fall after reaching nearly two-month highs on Tuesday.
The sell-off followed the release of the Labor Department's report on U.S. employment in June, which showed a continued increase in employment, although the pace of job growth fell well short of estimates. Non-farm payroll employment rose by 80,000 jobs in June versus forecasts for an increase of about 100,000 jobs. The unemployment rate was unchanged at 8.2 percent, in line with estimates.
While the disappointing data generated considerable selling pressure, analysts suggested that the report was not bad enough for the Federal Reserve to consider further quantitative easing. Recently, some soft economic data had been greeted positively by traders, as the reports seemed to increase the likelihood of further stimulus.
Among individual stocks, shares of Seagate Technology (STX) ended the day moderately lower after the hard disk drive maker lowered its fourth quarter revenue guidance.
The major averages regained some ground in late-day trading but still closed firmly in negative territory. The Dow slid 124.20 points or 1 percent to finish at 12,772.47, while the NASDAQ tumbled 38.79 points or 1.3 percent to end at 2,937.33 and the S&P 500 dropped 12.90 points or 0.9 percent to 1,354.68. For the holiday-interrupted week, the NASDAQ edged up 0.1 percent, while the Dow and the S&P 500 fell 0.8 percent and 0.5 percent, respectively.
In economic news, China will on Monday provide June figures for consumer and producer price indexes, coinciding with the market open. Consumer prices are expected to rise 2.3 percent on year, down from 3.0 percent in May. Producer prices are expected to contract an annual 1.9 percent after shedding 1.4 percent in the previous month.
by RTT Staff Writer
For comments and feedback: firstname.lastname@example.org