RTTNews - The Hong Kong stock market has finished lower now in consecutive trading days, giving away more than 310 points or 1.5 percent in coming down from a 12-month closing high. The Hang Seng Index slid below the 20,500-point plateau, and now analysts are predicting that the market will continue to move to the downside at the opening of trade on Thursday.
The global forecast could signal selling pressure for the Asian markets, thanks largely to continued profit taking for several of the key bourses following sharp advances last week. Oil, health insurance and telecommunication shares are expected to see additional pressure, with some support coming from bargain hunting among the financials and the properties. The European markets finished firmly in negative territory, while the U.S. bourses ended slightly in the red - and the Asian markets also are tipped to head to the downside.
The Hang Seng finished sharply lower on Wednesday, dragged to the downside by weakness from the mainland H-Shares. Financials and properties fell under heavy pressure throughout the session, while the commodities also ended lower.
For the day, the index shed 301.66 points or 1.45 percent to close at 20,494.77 after trading between 20,436.65 and 20,995.81 on turnover of 84.09 billion Hong Kong dollars.
Among the decliners, HSBC shed 0.78 percent, while China Mobile eased 0.06 percent, ICBC was down 1.85 percent, China Construction Bank fell 3.25 percent, Bank of China dropped 2.90 percent, China Life was down 0. 44 percent, Ping An shed 1.25 percent, Cathay Pacific Airways lost 2.69 percent, Cheung Kong fell 0.56 percent, SHK Properties slumped 4.69 percent, PetroChina was down 0.87 percent, Sinopec fell 2.25 percent, CNOOC shed 1.12 percent and China Shenhua dropped 1.21 percent.
The lead from Wall Street is mildly negative as stocks finished Wednesday's session moderately lower after disappointing data on the health of the service sector and the labor market generated some selling pressure. The major averages all closed in negative territory, offsetting some of their recent gains.
Prompting some negative sentiment in the markets was a report from the Institute for Supply Management on activity in the service sector in the month of July, which showed that the pace of contraction in the sector unexpectedly accelerated from the previous month. The ISM said its index of activity in the sector edged down to 46.4 in July from 47.0 in June, with a reading below 50 indicating a contraction in the sector. The decrease came as a surprise to economists, who had expected the index to rise to 48.0.
A separate report released by payroll processor Automatic Data Processing (ADP) showed that private sector employment saw another notable decline in the month of July, although the pace of job losses slowed to its slowest rate since October of 2008. ADP said non-farm private employment fell by 371,000 jobs in July following a revised decrease of 463,000 jobs in June. Economists had been expecting a decrease of about 350,000 jobs compared to the loss of 473,000 jobs originally reported for the previous month.
Meanwhile, the U.S. Commerce Department revealed that factory orders rose 0.4 percent in June, surprising economists, who had expected orders to drop 0.8 percent.
On the earnings front, traders reacted to a mixed bag of earnings, with Procter & Gamble (PG), Kraft Foods (KFT), Ralph Lauren (RL) and Electronic Arts (ERTS) largely beating bottom line estimates while falling short on the revenue front.
The major averages saw a late session recovery attempt fizzle, leading to a negative finish. The Dow closed down by 39.22 points or 0.4 percent at 9,280.97, the NASDAQ slipped by 18.26 points or 0.9 percent to 1,993.05 and the S&P 500 fell by 2.93 points or 0.3 percent to 1,002.72.
In economic news, the number of sale and purchase agreements for all building units received for registration was 14,039 in July, down 10.8 percent from June, the Hong Kong Land Registry said. Compared to the previous year, the transactions were up 57.2 percent. The sale and purchase agreements for residential units totaled 12,023, down 12.9 percent compared with June, but up 61.8 percent compared with the previous year. The total consideration of agreements dropped 7.9 percent month-on-month in July to HK$53.6 billion. Year-on-year, however, it grew 63.9 percent.
Also, the People's Bank of China on Wednesday reaffirmed in its second quarter monetary policy report that it will continue to adopt moderately loose monetary policy. The central bank added that it would take steps to maintain appropriate lending growth.
Although signs of a general trend of stabilization are confirmed, the recovery may be slow. The central bank said exiting policies too quickly would weaken economic recovery. On the other hand, a too slow exit could lead to another round of asset bubbles and higher inflation.
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