The South Korean stock market has finished lower now in back-to-back sessions, giving away nearly 30 points or 2.3 percent in the process. The KOSPI crashed through support at 1,350 points on Monday, and now analysts are forecasting a cautious performance at the opening of trade on Tuesday.
The global forecast for the Asian markets is wrought with uncertainty as investors are increasingly nervous over the spread of swine flu, with travel and tourism stocks expected to remain under pressure - although pharmaceuticals are likely to continue to outperform. Some mixed news out of the corporate world adds to the overall negative sentiment. The European markets ended mixed but near the unchanged line, while the U.S. markets were solidly in the red - and the Asian bourses are tipped for little movement with a touch of downside.
The KOSPI finished sharply lower on Monday as investors locked in gains from last week's four-day winning streak. The travel and tourism stocks fell under heavy pressure, while the financials also were down.
For the day, the index lost 14.27 points or 1.1 percent to close at 1,339.83 after trading between 1,334.02 and 1,366.66. Volume was at 537.02 million shares worth 6.79 trillion won, with decliners outnumbering gainers by 491 to 369.
Among the decliners, Hyundai Motor declined 1.65 percent, while STX Pan Ocean slumped 9.2 percent, Hana Financial Group tumbled 6.4 percent, Korean Air Line plunged 7.35 percent, Asiana Air Line tumbled 5.21 percent, Samsung Electronics declined 1.18 percent, LG Electronics fell 3.77 percent, Korea Exchange Bank fell 1.41 percent, Woori Finance tumbled 4.26 percent, KB Financial was down 2.63 percent, Samsung Heavy Industries declined 1.95 percent and Daewoo Shipbuilding moved down 2.06 percent.
Bucking the trend, Kia Motor gained 2.44 percent, while Ssangyong Motor moved up 1.92 percent, Hynix Semiconductor rose 1.66 percent, POSCO gained 0.38 percent, SK Telecom moved up 0.54 percent and Hyundai Heavy rose 0.88 percent.
Wall Street offers a negative lead as stocks ultimately closed well below the unchanged line after seeing some uncertainty for most of Monday's trading session. The lower close came as traders expressed concerns about the economic impact of the swine flu outbreak
Analysts say that traders used the swine flu scare as an excuse to take some money off the table, but a full blown epidemic could lead to a 10 to 15 percent correction. Although the flu does seem to be spreading, many doctors agree that the swine flu is no more panic worthy than any other breakout of the human flu during flu season. President Barack Obama said Monday that the spreading swine flu is something that should raise the country's state of alert but should not be seen as a cause for alarm.
On the corporate front, Verizon (VZ) reported first quarter net income of $0.58 per share, compared to $0.57 per share in the year-ago period. Excluding special items, net income attributable to Verizon was $0.63 per share, compared to $0.61 per share in same quarter last year. On average, analysts expected the company to report earnings of $0.59 per share.
Meanwhile, Whirlpool Corp. (WHR) reported first quarter earnings of $0.91 per share, compared to $1.22 in the prior year quarter. The company reported net sales of $3.57 billion, down from $4.61 billion in the year-ago period.
In other news, auto giant General Motors (GM) said that it will cut 21,000 hourly jobs and reduce its U.S. dealer count by 42 percent by the end of 2010 under a revised viability plan. The company also plans to phase out its Pontiac brand and focus on its four core brands in the U.S.
The major averages all ended the day firmly in negative territory, although well off their lows for the session. The Dow closed down 51.29 points or 0.6 percent at 8,025.00, the NASDAQ closed down 14.88 points or 0.9 percent at 1,679.41 and the S&P 500 closed down 8.72 points or 1.0 percent at 857.51.
In corporate news, the U.S. Justice Department announced Monday that a Korean executive from LG Display has agreed to plead guilty and serve a year in jail in the US for participating in a global conspiracy to fix prices in the sale of Thin Film Transistor-Liquid Crystal Display panels.
According to the department, Bock Kwon, an executive of LG, conspired with employees from other TFT-LCD panel makers to suppress and eliminate competition by fixing the prices of TFT-LCD panels from around September 21, 2001 to around June 1, 2006.
During the charged conspiracy, Kwon, a citizen of the Republic of Korea, held several high-level positions at LG, including president of LG's Taiwan subsidiary, vice president of notebook sales, vice president of sales planning, and executive vice president of sales and marketing.
Under the plea agreement, Kwon has agreed to serve a 12-month prison sentence in the US and to pay a $30,000 criminal fine.
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