The Korean benchmark index KOSPI drifted lower on Tuesday as traders took Wall Street cues and pressed sales in bank, shipbuilding, automobile and steel stocks.
The benchmark index, which opened at 1,406 this morning and dropped down to 1,396, is currently trading at 1,403, down 11.94 points or 0.84% from its previous close.
With no positive triggers in the form of corporate news or economic data in sight, participants appear keen on taking profits this morning. Barring technology stocks, which have fared reasonably well, stocks from other sectors are currently struggling for support.
In the banking space, Korea Exchange Bank and KB Financial are down by over 3.5%. Woori Finance is trading 2.6% down, while Shinhan Financial is trading lower by 0.7%.
Among shipbuilders, Daewoo Shipbuilding is down by 3.3%. Hyundai Heavy Industries and Samsung Heavy Industries are trading lower by 2.6% and 2.2% respectively. Bulk carrier STX Pan Ocean is down with a 3.5% loss.
Steel stock POSCO is down by over 3% and Hyundai Steel is down with a 0.5% loss. Oil stocks SK Holdings and S-Oil are trading about 0.8% down from their previous closing prices, while energy stock KEPCO is down marginally.
In the automobile space, Kia Motors is down 1.2%. Ssangyong Motor is trading 0.7% down and Hyundai Motor is down with a marginal loss. Airliners Korean Airline and Asiana Airline are down by 2.1% and 1.1%, respectively. Telecom stocks are exhibiting a mixed trend.
Tracking a fairly good show by technology stocks on Wall Street, tech stocks are trading firm. Hynix Semiconductor is up 2.8%. LG Electronics and LG Display LCD are trading nearly a percent up each, while heavyweight Samsung Electronics is up by 0.6%.
Most of the markets across the Asia-Pacific region are down in the red today with participants resorting to profit taking after recent sharp gains. The stock markets in Australia, New Zealand, Japan, Singapore and Taiwan trading sharply lower. However, bucking the trend, Shanghai and Hong Kong are trading modestly higher.
On Monday, stock markets across the Asia-Pacific region had closed mostly lower, as traders cashed in on the recent strength in the markets. However, Japan's benchmark Nikkei 225 Index bucked the downtrend, edging up 0.2 percent.
The major European markets also pulled back off their recent highs, with the O.K. FTSE 100 Index closing down 0.6 percent, while the French CAC 40 Index and the German DAX Index fell 1.9 percent and 1 percent, respectively.
Wall Street ended on a weak note on Monday with stocks moving mostly lower during the session as traders chose to take profits after recent strong gains. Banking stocks bore the brunt of pressure on Monday after U.S. Bancorp, BB&T and Capital One revealed plans to sell common stock in order to raise proceeds to repay funds received under the government's financial bailout program.
Billionaire investor Warren Buffet's Berkshire Hathaway's weak quarterly numbers also hurt sentiment to an extent. Berkshire Hathaway reported a first quarter net loss of $1.53 billion compared to a year-ago profit of $940 million. Berkshire Hathaway's results were hurt by a drop in revenues as well as huge investment and derivative losses primarily on write-downs on investments in ConocoPhillips.
In other news, President Barack Obama spoke earlier in the day, saying that a meeting with leading health care groups resulted in a pledge to reduce health care costs by $2 trillion over the next decade.
The president said that the health care groups have voluntarily come together to make an unprecedented commitment to cut the rate of growth of national health care spending by 1.5 percentage points each year over the next ten years. Obama also urged Congress to work to reform health care by the end of the year, stressing that reform went beyond reducing costs.
The Dow fell 155.88 points or 1.8 per cent to 8,418.77 and the S&P 500 closed down 19.99 points or 2.2 percent at 909.24. The Nasdaq closed down only 7.76 points or 0.5 percent at 1,731.24.
Crude oil contracts opened the session significantly lower. The contracts recovered the majority of losses, unlike in the equity markets, where losses have accelerated. June crude oil closed at $58.53 per barrel, fractionally lower.
On Tuesday, trading could be impacted by the release of the Commerce Department's report on the U.S. trade deficit for the month of March. The deficit is expected to widen to $29.0 billion from $26.0 billion in February.
There are other key economic reports due to be released later in the week, including reports on retail sales, industrial production, and producer and consumer price inflation. Traders are also likely to keep a close eye on the weekly jobless claims report.
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