RTTNews - One day after ending the modest two-day losing streak that had cost it 15 points or 0.9 percent, the South Korean stock market moved emphatically back to the downside on Monday. The KOSPI crashed through support at the 1,550-point plateau, and now analysts are predicting additional heavy losses when the market kicks off trade on Tuesday.
The global forecast for the Asian markets is broadly pessimistic as markets around the world plunged on fears that an economic recovery is not quite as close as many had believed. Resource stocks are expected to see continued pressure - particularly the steel, oil and gold stocks - while the financials and properties also are forecast to see heavy selling pressure. The European and U.S. markets were sharply lower, and the Asian markets are tipped to follow that lead.
The KOSPI finished sharply lower on Monday, thanks to weakness among the financials and technology stocks.
For the day, the index plunged 44.35 points or 2.8 percent to finish at 1547.06 after trading between 1,541.74 and 1,588.73.
Among the decliners, KB Financial Group lost 4.8 percent, while Daewoo Securities dropped 5.9 percent, Samsung Electronics fell 2.5 percent, Hyundai Motor shed 3.6 percent, POSCO was off 3.2 percent, Korean Air lost 5.1 percent and Hana Tour plunged 10.1 percent.
Finishing higher, Green Cross jumped by the daily limit of 15 percent, while Hyundai Merchant Marine added 3.7 percent and Hyundai Elevator was up 2.1 percent.
The lead from Wall Street is brutally negative as stocks saw a sharp pullback on Monday, with last week's disappointing data on the health of the consumer sparking a broad-based sell-off in equities. The major averages all finished substantially lower, as some speculated that the markets rose in spite of weak fundamentals.
Also deflating traders' mood was news that Lowe's (LOW) second quarter earnings and revenues fell short of estimates. The home improvement retailer also provided disappointing guidance.
Nonetheless, some of the pessimism was moderated by the release of a report from the Federal Reserve Bank of New York showing that conditions for New York manufacturers improved for the first time in well over a year in the month of August. The New York Fed said its general business conditions index rose to 12.1 in August from a negative 0.6 in July, with a positive reading indicating an expansion in the manufacturing sector. Economists had been expecting the index to increase more modestly to 3.0.
Stocks rose by a modest margin after the National Association of Home Builders released its report on homebuilder confidence in the month of August, showing that its homebuilder confidence index rose to its highest level in over a year. The report showed that the NAHB/Wells Fargo Housing Market Index rose to 18 in August from 17 in July. With the increase, which came in line with economist estimates, the index rose to its highest level since June of 2008.
The major averages remained stuck in the red going into the close, finishing near their worst levels of the day. The Dow closed down by 186.06 points or 2 percent at 9,135.34, the NASDAQ fell by 54.68 points or 2.8 percent to 1,930.84 and the S&P 500 slipped by 24.36 points, or 2.4 percent to 979.73.
On the corporate front, the Korean Central News Agency, the North's official media, says that Pyongyang and Seoul's Hyundai Group on Monday agreed to resume their inter-Korean tourism projects and facilitate operation of the joint industrial park in the North's border town of Kaesong.
The two sides also decided to arrange the reunions of separated families and relatives from the North and South in Mount Kumgang on the day of Chuseok this year, a joint press release issued by Hyundai and the North's Korea Asia-Pacific Peace Committee, which handles inter-Korean business ties, said.
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