The South Korean stock market has alternated between positive and negative finishes through the last four trading days, since the end of the four-day losing streak in which it had declined nearly 70 points or 3.3 percent. Now at a two-month closing low, the KOSPI settled just above the 2,055-point plateau, and now traders are bracing for further damage when the market kicks off trade on Tuesday.
The global forecast for the Asian markets is broadly negative thanks to persistent and growing concerns about the debt situations in Europe. Technology stocks figure to lead the market lower, along with oil companies and financials. The European and U.S. markets all finished with heavy losses on Monday and the Asian bourses are also expected to move lower.
The KOSPI finished sharply lower on Monday following heavy losses among the automobile producers and the technology stocks.
For the day, the index plummeted 55.79 points or 2.6 percent to finish at 2,055.71 after trading between 2,055.71 and 2,100.44. There were 691 decliners and 146 gainers.
Among the decliners, Hyundai Motor plunged 5.4 percent, while Kia Motors shed 4.7 percent and Ssangyong Motor dropped 4.0 percent.
Wall Street offers no help as stocks saw continued weakness throughout Monday's session. The initial sell-off was largely due to renewed concerns about the financial situation in Europe, although selling pressure waned not long after the open.
The sell-off seen at the open came as traders reacted to news that Standard & Poor's downwardly revised its outlook for Italy's credit ratings to negative from stable. S&P said that the move reflects its views of the heightened downside risks in the government's debt reduction plan.
The announcement from S&P came after Fitch Ratings lowered its credit ratings on Greece to B+ from BB+. Fitch said the downgrade was partly due to concerns that Greece will need to undertake further austerity measures to reach the goal of reducing the 2011 budget deficit to 7.5 percent of GDP. Worries about European debt contributed to weakness among stocks around the world, as traders expressed concerns about the potential impact on the global economic recovery.
The weakness on Wall Street also came amid a lack of major U.S. economic data, although closely watched reports on new home sales, durable goods orders, and weekly jobless claims are due to be released later this week.
Among individual stocks, shares of Sony (SNE) fell by 1.7 percent after the consumer electronics giant said that it expects to report an annual loss of about $3.2 billion compared to its previous forecast for a profit of about $860 million. Sony said that the results reflect a non-cash charge of about $4.4 billion to be recorded in the fourth quarter of fiscal 2011 to establish a valuation allowance against certain deferred tax assets in Japan.
Campbell Soup (CPB) also closed moderately lower even though the company reported third quarter adjusted earnings of $0.57 per share compared to analyst estimates for earnings of $0.52 per share. The company said its sales edge up to $1.81 billion, just above analyst estimates.
While the major averages did not see much follow-through on the initial downward move, they remained stuck firmly in the red. The Dow fell 130.78 points or 1.1 percent to 12,381.25, the NASDAQ dropped 44.42 points or 1.6 percent to 2,758.90 and the S&P 500 slid 15.90 points or 1.2 percent to 1,317.37. With the steep losses on the day, the major averages all ended the session at their worst closing levels in over a month.
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