The Hong Kong stock market on Tuesday finally wrote a finish to the brutal eight-day losing streak in which it had plummeted more than 1,350 points or 7 percent. The Hang Seng Index finished just shy of the 19,900-point plateau, although now analysts are forecasting renewed selling pressure at the opening of trade on Wednesday.
The global forecast for the Asian markets is negative due to the political situation in Greece, which is headed for a new round of elections after lawmakers failed to form a coalition government. In addition, rating agency Moody's Investors Service has downgraded 26 Italian banks, calling them now amongst the lowest in advanced European countries. However, the downside may be limited by some upbeat U.S. economic data. The European and U.S. markets finished firmly in the red, and the Asian bourses are expected to follow that lead.
The Hang Seng finished modestly higher on Tuesday following gains from the financial shares, shipping stocks and telecoms.
For the day, the index collected 159.27 points or 0.81 percent to finish at 19,894.31 after trading between 19,639.85 and 19,923.19 on volume of 56.57 billion Hong Kong dollars.
Among the gainers, HSBC jumped 1.6 percent, while China Mobile added 0.9 percent, China Container Shipping Lines surged 11.5 percent, Orient Overseas spiked 5.4 percent, Cosco Pacific climbed 1.7 percent and Tencent rose 2.1 percent.
The lead from Wall Street continues to suggest consolidation as stocks came under pressure in the latter part of the trading day on Tuesday, after showing a lack of direction for much of the session. With the losses, the major averages again ended at their worst closing levels in over three months.
The selling pressure followed continued uncertainty about the political situation in Greece, which is headed for a new round of elections after lawmakers failed to form a coalition government. The new elections are seen as referendum on whether Greece should remain a member of the Eurozone, adding to the recent worries about the outlook for Europe.
However, some upbeat U.S. economic data helped to limit the downside. The National Association of Home Builders reported that homebuilder confidence reached a five-year high in May. The NAHB/Wells Fargo Housing Market Index jumped to 29 in May from a downwardly revised 24 in April. Economists had expected the index to edge up to 26 from the 25 originally reported for the previous month.
A separate report from the New York Federal Reserve showed a much faster than expected expansion in New York manufacturing activity. The New York Fed said its general business conditions index jumped to 17.1 in May from 6.6 in April, with a positive reading indicating an increase in regional manufacturing activity. Economists had expected the index to show a more modest increase to a reading of 10.0.
Additionally, the Commerce Department said retail sales edged up by 0.1 percent in April following a revised 0.7 percent increase in March - matching forecasts. Core sales, which exclude gas, autos, and building materials, rose by 0.4 percent in April, exceeding estimates for a 0.3 percent increase.
Among individual stocks, shares of Home Depot (HD) fell by 2.4 percent after the home improvement retail giant reported first quarter earnings that beat estimates but on weaker than expected sales. Avon Products (AVP) also came under pressure after Coty Inc. withdrew its $10.7 billion offer to acquire the cosmetics company.
The major averages moved roughly sideways going into the close, stuck firmly in negative territory. The Dow fell 63.35 points or 0.5 percent to finish at 12,632.00, while the NASDAQ slipped 8.82 points or 0.3 percent to end at 2,893.76 and the S&P 500 dropped 7.69 points or 0.6 percent to 1,330.66.
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