RTTNews - One day after ending the three-day losing streak in which it had shed 420 points or 2.4 percent, the Hong Kong stock market turned right back to the downside on Monday. The Hang Seng fell through support at 18,000 points, and investors aren't expecting the market to reclaim that level by the opening of trade on Tuesday.
The global forecast for the Asian markets is effectively flat with a touch of downside, ahead of the start of earnings season later this week. Technology shares and commodities are expected to see selling pressure, offsetting projected strength among the properties and chemical stocks. The European markets ended sharply lower, while the U.S. bourses finished in mixed fashion but near the unchanged line - and the Asian markets are predicted to follow the latter lead.
The Hang Seng finished sharply lower on Monday, thanks to selling pressure among the oil companies and property shares. For the day, the index retreated 223.99 points or 1.2 percent to close at 17,979.41 after trading between 17,897.68 and 18,258.26 on turnover of 54.2 billion Hong Kong dollars.
Among the decliners, Sun Hung Kai Properties plunged 1.4 percent, while Cheung Kong dropped 0.8 percent, PetroChina fell 2.2 percent and CNOOC shed 2.2 percent.
Wall Street offers a mixed lead as stocks were able to shed most of their losses in late trading on Monday after a sharp move to the downside in early going. While the Dow and S&P 500 finished modestly higher, the tech-heavy NASDAQ closed on the downside.
On the economic front, traders largely shrugged off a report from the Institute for Supply Management showing that activity in the service sector contracted for the ninth consecutive month in June, although at a slower pace than economists had been expecting. The ISM said its index of activity in the service sector rose to 47.0 in June from 44.0 in May, but a reading below 50 indicates a contraction. Economists had been expecting the index to come in at 46.0.
On the corporate front, food and beverage giant PepsiCo Inc. (PEP), together with its bottling partner Pepsi Bottling Group Inc. (PBG), announced plans to invest $1 billion in Russia over three years. Meanwhile, EMC (EMC) raised its all-cash offer to acquire Data Domain (DDUP) to $33.50 per share for a total enterprise value of about $2.1 billion. EMC is competing with NetApp (NTAP) to acquire Data Domain.
Despite the major indices all moving higher going into the close, the NASDAQ was unable to break into positive territory. Subsequently, the NASDAQ finished down by 9.12 points or 0.5 percent at 1,787.40, while the Dow closed up by 44.13 points or 0.5 percent at 8,324.87 and the S&P 500 rose by 2.30 or 0.3 percent to 898.72.
In economic news, Hong Kong will on Tuesday release FX reserves figures for June, with analysts expecting a surplus of $212.3 billion after the $205.1 billion surplus in May.
Also, Hong Kong's Financial Secretary John Tsang said on Monday that the economy has stabilized somewhat and contraction in the second quarter will be smaller than in the first quarter due to the improvement in exports and domestic demand. The economy contracted 7.8 percent year-on-year in the first quarter, which was the biggest fall since Asian financial crisis in 1998.
Although the economy has stabilized, the economic outlook remain uncertain, Tsang told legislators. He said the unemployment rate in the short term would continue to face upward pressure.
The government has announced relief measures worth 87.6 billion yuan since last year. Tsang noted that these measures had a positive effect on the domestic economy.
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