RTTNews - The South Korean stock market on Tuesday extended its winning streak to three sessions, gathering more than 22 points or 1.7 percent to hit a fresh high for the year. The KOSPI broke through resistance at the 1,430-point plateau - but the market is expected to fall sharply on Wednesday, perhaps testing the 1,400-point level.
The global forecast for the Asian markets is laced with pessimism as investors are likely to be cautious ahead of the opening of corporate reporting season for the second quarter. A steady decline in commodities for the fifth straight day also is expected to weigh on investors. The European and U.S. markets finished sharply lower, and the Asian bourses are tipped to follow that lead.
The KOSPI finished modestly higher on Tuesday, pushed into positive territory by gains among the technology shares - although selling among the energy and shipping sectors pared much of the gains.
For the day, the index added 5.26 points or 0.4 percent to close at 1,434.20 after trading between 1,426.95 and 1,439.57.
Among the gainers, Samsung Electronics climbed 2.5 percent, while LG Electronics jumped 5.3 percent, Hynix Semiconductor rose 2.3 percent, Hyundai Motor added 3.4 percent, Kia Motors gained 3 percent and Korea Exchange Bank was up 1.9 percent.
Finishing lower, SK Energy shed 1.1 percent, while Hanjin Shipping fell 2.9 percent, STX Pan Ocean dropped 3.1 percent and Hyundai Merchant declined 2.1 percent.
The lead from Wall Street is broadly negative as stock finished sharply lower on Tuesday, with traders doing some profit taking on the day amid a lack of significant economic data to drive trading. The major averages all closed lower by considerable margins, with the sell off accelerating late in the session. Cashing in on recent gains, traders braced for what is expected to be a dreary earnings reporting season, with aluminum producer Alcoa (AA) set to report after the close of trading on Wednesday.
Aside from the earnings data on tap for the second half of the week, traders are also looking ahead to a series of economic reports on employment, international trade and consumer sentiment, with expectations deflated following disheartening employment data last week.
Earlier today, the results of the Treasury's auction of $35 billion worth of three-year notes cooled investor anxiety in regards to rising interest rates amid the recessionary economic conditions. The sale drew a high-yield of 1.519 percent and attracted moderately strong demand, with the bid-to-cover ratio coming in at 2.62. The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.
Monday, an auction of 10-year Treasury Inflation Protect Securities, or TIPS, drew a yield of 1.92 percent and a bid-to-cover ratio of 2.51, its highest in nine years. Traders will also look the Treasury's sale of $19 billion worth standard ten-year notes on Wednesday. The results of the standard ten-year auction and the sale of TIPS will be closely watched by investors, who will compare the yields to gauge the prospect of near-term inflation.
The government has continued to sell bonds in record amounts to fund its accelerated stimulus spending, while recent comments from the Obama administration have led to rampant speculation regarding a second stimulus package.
The major averages all finished lower, seeing further downside in late day trading. The Dow fell 161.27 points or 1.9 percent to 8,163.60, the NASDAQ closed down 41.23 points or 2.3 percent at 1,746.17, while the S&P 500 dropped by 17.69 or 2 percent at 881.03.
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