The Hong Kong stock market saw an emphatic finish to the modest two-day winning streak in which it gained more than 400 points or 2.7 percent in the process. The Hang Seng Index crashed back below support at 15,000 points, and analysts do not expect the market to reclaim that level at the opening of trade on Tuesday.
The global forecast for the Asian markets is wrought with uncertainty as investors are increasingly nervous over the spread of swine flu, with travel and tourism stocks expected to remain under pressure - although pharmaceuticals are likely to continue to outperform. Some mixed news out of the corporate world adds to the overall negative sentiment. The European markets ended mixed but near the unchanged line, while the U.S. markets were solidly in the red - and the Asian bourses are tipped for little movement with a touch of downside.
The Hang Seng finished sharply lower on Monday, thanks to selling pressure on the airlines, financials, properties and food suppliers. Gains among the pharmaceuticals and health care stocks limited the declines.
For the day, the index lost 418.43 points or 2.7 percent to close at 14,840.42 after trading between 14,798.90 and 15,160.69 on turnover of 53 billion Hong Kong dollars.
Among the decliners, ICBC fell 5.9 percent, while China Construction Bank was down 3.6 percent, Hutchison Telecommunications dropped 44.9 percent, Yanzhou Coal fell 5.8 percent, Cathay Pacific Airways was down 8 percent, Air China retreated 12.8 percent, China Southern Airlines slid 14.5 percent, China Cosco gave up 7.1 percent, China Shipping Development was down 9.9 percent and Yurun Food dropped 10.2 percent.
Finishing higher, China Pharmaceuticals jumped 13.2 percent, while Guangzhou Pharmaceutical advanced 13.4 percent, Wuyi International Pharma soared 31 percent and Hong Kong Health Check and Laboratory Holdings advanced 11.1 percent.
Wall Street offers a negative lead as stocks ultimately closed well below the unchanged line after seeing some uncertainty for most of Monday's trading session. The lower close came as traders expressed concerns about the economic impact of the swine flu outbreak
Analysts say that traders used the swine flu scare as an excuse to take some money off the table, but a full blown epidemic could lead to a 10 to 15 percent correction. Although the flu does seem to be spreading, many doctors agree that the swine flu is no more panic worthy than any other breakout of the human flu during flu season. President Barack Obama said Monday that the spreading swine flu is something that should raise the country's state of alert but should not be seen as a cause for alarm.
On the corporate front, Verizon (VZ) reported first quarter net income of $0.58 per share, compared to $0.57 per share in the year-ago period. Excluding special items, net income attributable to Verizon was $0.63 per share, compared to $0.61 per share in same quarter last year. On average, analysts expected the company to report earnings of $0.59 per share.
Meanwhile, Whirlpool Corp. (WHR) reported first quarter earnings of $0.91 per share, compared to $1.22 in the prior year quarter. The company reported net sales of $3.57 billion, down from $4.61 billion in the year-ago period.
In other news, auto giant General Motors (GM) said that it will cut 21,000 hourly jobs and reduce its U.S. dealer count by 42 percent by the end of 2010 under a revised viability plan. The company also plans to phase out its Pontiac brand and focus on its four core brands in the U.S.
The major averages all ended the day firmly in negative territory, although well off their lows for the session. The Dow closed down 51.29 points or 0.6 percent at 8,025.00, the NASDAQ closed down 14.88 points or 0.9 percent at 1,679.41 and the S&P 500 closed down 8.72 points or 1.0 percent at 857.51.
In economic news, Hong Kong recorded a trade deficit of HK$18.2 billion in March, lower than a deficit of HK$28.1 billion in the previous year, the Census and Statistics Department said Monday. Economists expected a trade deficit of HK$19.2 billion.
Exports fell 21.1 percent year-on-year in March to HK$175.5 billion, slower than a 23 percent fall in February. Re-exports declined 20.5 percent to HK$171.05 billion, while domestic exports dropped 41.1 percent to HK$4.4 billion. Imports were down 22.7 percent annually to HK$193.7 billion in March compared to a 17.5 percent drop in the preceding month. Economists expected exports to fall 19 percent and imports to decline 19.5 percent in March.
Month-on-month, exports were up 23.6 percent, while imports rose 17.3 percent in March. In the January-March period, the trade deficit narrowed to HK$34.3 billion from HK$51.5 billion last year. Exports slipped 2.4 percent, while imports declined 2.5 percent.
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