The Hong Kong stock market has finished lower now in consecutive trading days, shedding more than 700 points or 5 percent along the way. The Hang Seng Index is holding on to support at 14,500 points, but investors are expecting the market to slide through that level at the opening of trade on Wednesday.
The global forecast for the Asian markets is fairly pessimistic as concerns over the spread of swine flu continue to weigh on investors. Some slightly better than expected economic data provides a bit of optimism, as does some mixed corporate news. The European markets ended sharply lower and the U.S. markets ended barely below the unchanged line, and the Asian markets are tipped to follow the latter lead.
The Hang Seng finished sharply lower again on Tuesday, dragged to the downside by heavy losses among the travel and tourism stocks - although the pharmaceuticals bucked the trend to finish higher.
For the day, the index plummeted 285.31 points or 1.92 percent to close at 14,555.11 after trading between 14,457.99 and 15,078.63 on turnover of 56.24 billion Hong Kong dollars. Among the actives, HSBC dropped 2.5 percent, while Cathay Pacific fell 1 percent and Industrial and Commercial Bank of China rose 2.5 percent.
The lead from Wall Street is virtually flat with a touch of downside as stocks showed a lack of direction throughout the trading day on Tuesday after failing to sustain an initial downward move. The major averages bounced back and forth across the unchanged line before eventually ending the session modestly lower. The choppy trading came as traders digested mixed economic and corporate news combined with continued concerns that the swine flu outbreak may become a pandemic.
In economic news, the Conference Board released a report earlier in the day showing that its consumer confidence index increased by much more than expected in April, reflecting a significant improvement in consumers' assessment of the short-term outlook. The report showed that the consumer confidence index jumped to 39.2 in April from an upwardly revised 26.9 in March. Economists had expected the index to increase to 29.7 from the 26.0 originally reported for the previous month.
Separately, a report from Standard and Poor's showed that the S&P/Case-Shiller 20-City Composite Home Price Index fell at an annual rate of 18.6 percent in February, a modest deceleration from the 19.0 percent drop in prices that was reported for January.
In other news, the Wall Street Journal reported that regulators are pushing Bank of America (BAC) and Citigroup (C) to raise more capital following early results of the government's stress test analysis, generating some concerns about the results of the tests. The Journal said that the capital shortfall amounts to billions of dollars at Bank of America. The report specified that executives at both banks are objecting to the preliminary findings from the government's examination.
Meanwhile, an increase in the number of confirmed cases of swine flu has led the World Health Organization to raise the level of its influenza pandemic alert to Phase 4. At the same time, the WHO does not recommend that countries close borders or restrict travel.
The major averages moved to the downside in the latter part of the trading day, ending the session just below the unchanged line. The Dow closed down 8.05 points or 0.1 percent at 8,016.95, the NASDAQ closed down 5.60 points or 0.3 percent at 1,673.81 and the S&P 500 closed down 2.35 points or 0.3 percent at 855.16.
In corporate news, Bank of China saw first-quarter net profit fall 14.41 percent from a year ago on writedowns of sub-prime-related assets, the bank said on Tuesday. Net profit in the first three months stood at 18.57 billion yuan or 0.07 yuan per share, down from 21.7 billion yuan or 0.09 yuan a year earlier.
Also, China Citic Bank saw income grow 60.7 percent on year to 13.3 billion yuan in 2008, the bank said on Tuesday. Business income was up 44.3 percent on year earlier to 40.16 billion yuan in 2008, while the returns of net assets increased 0.54 percentages points to 14.84 percent.
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