RTTNews - The winning streak came to a crashing halt on Wednesday for the Hong Kong Stock market, following the four-day winning streak in which it had collected nearly 1,400 points or 7.5 percent on its way to a fresh 10-month closing high. The Hang Seng Index closed above the 20,000-point plateau, although analysts predict that the market could dip below that level by the opening of trade on Thursday.
The global forecast for the Asian markets is mildly pessimistic as the downside correction is expected to continue following recent sharp gains. Resource stocks are expected to weigh heavily on investors - particularly the oil service, steel, natural gas and gold stocks. Disappointing earnings from Brazilian miner Vale could add to the pressure on commodities. The European markets finished solidly higher, while the U.S. markets ended modestly lower - and the Asian markets are also expected to trend to the downside.
The Hang Seng finished sharply lower on Wednesday, thanks to profit taking from the recent rally. Mainland China shares also weighed heavily on investors, while the properties and commodities ended sharply lower.
For the day, the index plummeted 489.04 points or 2.37 percent to close at 20,135.50 after trading between 19,787.48 and 20,542.61 on turnover of 101.79 billion Hong Kong dollars.
Among the decliners, HSBC Holdings dropped 1.22 percent, while SOHO China fell 3.4 percent, Sun Hung Kai Properties lost 2.72 percent, Cheung Kong slid 4.23 percent, Hutchison Whampoa shed 2.04 percent, Hopson Development Holdings was down 8.12 percent, Henderson Land fell 2.73 percent, Agile Property Holdings lost 4.31 percent, Zijin Mining Group dropped 5.73 percent, Zhaojin Mining shed 6.83 percent, Lingbao Gold Company fell 6.15 percent, Sino Gold Mining fell 4.2 percent, ICBC dropped 2.1 percent and China Construction Bank shed 1.4 percent.
The lead from Wall Street remains firmly negative as stocks bounced around in negative territory through Wednesday's session in reaction to the day's slew of earnings and economic reports following an early move to the downside. The major averages all finished lower by modest margins, experiencing another lackluster session.
On the economic front, the Commerce Department said that orders for transportation equipment declined sharply in June, contributing to a substantial decline in orders for manufactured durable goods. Durable goods orders fell 2.5 percent in June following a downwardly revised 1.3 percent increase in May. Economists had expected orders to fall 0.6 percent compared to the 1.8 percent increase originally reported for the previous month. Excluding a 12.8 percent decrease in orders for transportation equipment, orders for durable goods actually rose 1.1 percent in June compared to a 0.8 percent increase in May. The increase surprised economists, who had expected ex-transportation orders to come in unchanged.
Equities saw some further downside after the Treasury Department said its $39.0 billion sale of five-year notes drew a high yield of 2.625 percent. Demand was much weaker than expected, with the bid-to-cover ratio coming in at 1.92 compared to the 2.58 posted in the previous auction. The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.
Meanwhile, the markets saw little reaction to the Federal Reserve's Beige Book report. While the report indicated that economic activity continued to be weak going into the summer, it noted that most of the twelve Fed districts indicated that the pace of decline has moderated or that activity has begun to stabilize.
In earnings news, traders looked to quarterly results from Time Warner (TWX), Qwest (Q) and ConocoPhillips (COP), which reported earnings that largely beat Wall Street estimates. However, revenues fell short of expectations, a typical trend that has emerged amid the current earnings season.
The major averages staged a recovery attempt in the final hour of trading, although they remained stuck in negative territory. The Dow fell by 26 points or 0.3 percent to 9,070.72, the NASDAQ slipped by 7.75 points or 0.4 percent to 1,967.76 and the S&P 500 declined by 4.47 points or 0.5 percent to 975.15.
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