RTTNews - One day after snapping the three-day winning streak that saw it put on nearly 2,000 points or 11 percent on its way to an eight-month closing high, the Hong Kong stock market turned right back to the upside again on Wednesday. Now investors are bracing for another day of steep declines when the market opens for business on Thursday.
The global forecast for the Asian markets is heavy on pessimism, as many of the bourses are riding lengthy winning streaks and are overdue for a correction. Some uninspired economic data out of the United States adds to the negative sentiment. The European markets finished sharply lower, and the U.S. markets also ended firmly in the red, and the Asian markets are also forecast to move to the downside.
The Hang Seng finished modestly higher on Wednesday, as sharper gains in the morning session were erased by profit taking in the afternoon. Properties finished higher, as did the financials, commodities and mainland China stocks.
For the day, the index gained 187.39 points or 1.0 percent to close at 18,576.47 after trading between 18,508.30 and 18,967.39 on turnover of 90.63 billion Hong Kong dollars.
Among the gainers, Bank of Communications rose 2.8 percent, while Bank of China rose 2.1 percent, China Construction Bank gained 1.4 percent, PetroChina was up 1.9 percent, CNOOC gained 0.4 percent, Sino Land surged 6.2 percent, Wharf Holdings gained 5.3 percent, New World Development added 3.6 percent and Sun Hung Kai Properties was up 3.1 percent.
Wall Street offers a negative lead as stocks snapped a four-day winning streak on Wednesday, seeing a moderate retreat over the course of the trading session. The major averages all moved lower, as traders did some profit taking in reaction to some discouraging economic data.
Earlier in the day, Automatic Data Processing, Inc. (ADP) said that private sector employment experienced another notable decline in the month of May, with the decrease in jobs slightly exceeding economist estimates. ADP said non-farm private employment fell by 532,000 jobs in May following a revised decrease of 545,000 jobs in April. Economists had expected a decrease of about 525,000 jobs compared to the decline of 491,000 jobs originally reported for the previous month.
While a separate report from the Institute for Supply Management showed a slower pace of contraction in the service sector in the May, the index of activity in the sector increased by less than economists had expected. The ISM said its index of activity in the service sector rose to 44.0 in May from 43.7 in April, although a reading below 50 indicates a continued contraction in the sector. Economists had been expecting a somewhat more notable increase to a reading of 45.0.
Additionally, the Commerce Department released data showing a notable increase in factory orders in the month of April, but the increase came after a substantial decline in the previous month and came in slightly below economist estimates.
Traders largely shrugged off comments from Federal Reserve Chairman Ben Bernanke, who said recent data suggests that the economy will likely slow its pace of contraction on the back of improved consumer sentiment and consumer spending. Bernanke also warned of the potentially dire consequences of allowing the deficit to remain high and called on Congress to consider long-term steps for fiscal balance.
While the major averages moved well off their worst levels of the day in late day trading, they remained firmly negative. The Dow closed down 65.63 points or 0.8 percent at 8675.24, the NASDAQ closed down 10.88 points or 0.6 percent at 1825.92, and the S&P 500 fell 12.98 points or 1.4 percent to 931.76.
In corporate news, Tongjitang Chinese Medicines reported first quarter net loss attributable to the company of $1.66 million or RMB 11.36 million, the company said on Wednesday, compared to net income attributable to the company of RMB 11.88 million in the previous year.
Loss per share was $0.01, or RMB 0.08, compared to earnings per share of RMB 0.09 last year. Net loss per ADS was $0.04, or RMB0.32, for the quarter. Quarterly net revenues were $13.20 million, or RMB 90.18 million, lower than RMB 105.78 million in the comparable period a year ago.
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