RTTNews - The South Korean stock market has finished lower now in back-to-back sessions, giving up nearly 30 points or 2.1 percent in the process. The KOSPI has fallen through support at 1,400 points, and now analysts are expecting to see those losses accelerate further still at the opening of trade on Wednesday.
The global forecast for the Asian markets is broadly negative, thanks to the continued selling pressure expected on commodities in tandem with a decline in the price of metals and crude oil. Financials also are expected to decline. The European markets finished mostly lower and the U.S. markets ended sharply lower, and the Asian markets are also expected to head to the downside again.
The KOSPI finished modestly lower on Tuesday, dragged to the downside by weakness among the commodities and exporters - particularly the industrials. Technology shares and auto producers also ended lower.
For the day, the index retreated 13.27 points or 0.9 percent to close at 1399.15 after trading between 1,389.33 and 1,410.01.
Among the decliners, POSCO was down 0.5 percent, while STX Pan Ocean fell 4.2 percent, Samsung Electronics fell 2.4 percent and Hyundai Motor lost 2.4 percent. Finishing higher, KT Corp rose 1.3 percent and SK Telecom added 0.8 percent.
The lead from Wall Street is negative again as stocks turned lower over the course of the trading day on Tuesday after experiencing a strong start on the heels of largely encouraging economic data. The major averages pulled back firmly into negative territory, adding to the steep losses posted in the previous session.
The early strength came after the Commerce Department released a report showing that housing starts rose 17.2 percent to an annual rate of 532,000 units in May from the revised April estimate of 454,000. Economists had expected starts to rise to 485,000 from the 458,000 originally reported for the previous month. While single-family starts showed a notable 7.5 percent increase in May, the jump in housing starts was due in large part to a 77.1 percent increase in buildings with five units or more.
Separately, the Labor Department revealed that producer prices rose 0.2 percent in May. This followed a 0.3 percent increase for April and came in below economist estimates of a 0.6 percent increase. Core producer prices, which leave out the impact of volatile food and energy prices, edged down by 0.1 percent for May. In April, the figure was up by 0.1 percent.
Meanwhile, the Federal Reserve revealed that industrial production fell by 1.1 percent in May following a revised 0.7 percent decrease in April. Economists had been expecting production to fall 1.0 percent compared to the 0.5 percent drop originally reported for the previous month. The report also showed that capacity utilization fell to 68.3 percent in May from a revised 69.0 percent in the previous month. The capacity utilization rate had been expected to slip to 68.4 percent from the 69.1 percent originally reported for April.
In other news, the Federal Reserve continued its treasury buyback program Tuesday, completing its first quantitative easing move of the week. The New York Federal Reserve purchased $6.45 billion worth of securities with maturity dates ranging from May of 2012 to November of 2013. The day's buyback saw a total of $31.32 billion in treasuries submitted for the purchase. Overall, the Fed has purchased a total of $162.97 billion since the program began on March 25.
After the close of trading on Wall Street, Adobe Systems (ADBE) reported adjusted second quarter net income of $185.0 million or $0.35 per share compared to $272.7 million or $0.50 per share in the year-ago quarter. Analysts had expected the firm to earn $0.35 per share.
The major averages ended the session notably lower, just off their worst levels of the day. The Dow closed down by 107.46 points or 1.3 percent at 8,504.67, the NASDAQ closed down by 20.20 points or 1.1 percent at 1,796.18 and the S&P 500 closed down by 11.75 points or 1.3 percent at 911.97.
In economic news, the Asian Development Bank's Board of Directors on Tuesday approved the allocation of $3.4 billion in additional funds to help developing Asian countries in coping with the global economic crisis.
In a statement, the bank said its $3 billion Countercyclical Support Facility or CSF will provide short-term, fast-disbursing loans to support the member nations attempting to ramp up fiscal spending to counter the crisis, but who lack the financial means to do so amid tight global credit conditions and a sharp increase in funding costs.
The ceiling for the CSF will be $500 million per country and developing member countries who qualify for loans from ADB's Ordinary Capital Resources or OCR will be eligible.
Further, the ADB will provide $400 million to the Asian Development Fund or ADF to benefit nations with no access to the OCR. The ADF aid would be in the form of concessional loans and grants to low income developing member countries with limited repayment capacity.
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