RTTNews - The South Korean stock market was up by less than a point on Monday, but that was enough to stretch its winning streak to three sessions - collecting more than 15 points or 1 percent to reach its highest closing score in a year. The KOSPI remained above the 1,575-point plateau, although now investors are anticipating a bit of a pullback at the opening of trade on Tuesday.
The global forecast for the Asian markets is flat with a negative bias - particularly as investors may look to consolidate their positions after strong gains in the previous trading day. Commodities could see significant selling pressure, along with properties and airlines. The European markets were mostly lower, while the U.S. bourses ended slightly in negative territory - and the Asian markets are tipped also to move to the downside.
The KOSPI finished virtually flat on Monday, as gains among the chemical and airline stocks were wiped out by profit taking among the technology stocks.
For the day, the index was up 0.11 points or 0.01 percent to close at 1576.11 after trading between 1,573.22 and 1,588.15.
Among the gainers, Hyundai Merchant Marine Corp soared 10.9 percent, while Korean Air added 1.1 percent, Asiana Airlines surged 5 percent and LG Chem jumped 5.2 percent.
Finishing lower, Samsung Electronics shed 0.8 percent, KB Financial Group eased 0.5 percent and Woori Finance Holdings fell 1 percent.
The lead from Wall Street has a touch of downside as stocks posted modest losses on Monday with traders cashing in on recent gains amid a lack of significant moves. The major averages all finished in negative territory, kicking off the week on a sour note. The decline came ahead of some key economic reports on tap for this week, including data on retail sales, industrial production and weekly jobless claims.
Further, the Federal Open Market Committee will make its interest rate announcement on Wednesday, with the key fed funds rate expected to remain unchanged amid a challenging economic environment.
On the corporate front, Freddie Mac (FRE) said late Friday that it no longer needs government aid, as the mortgage lender posted a positive net worth. Benefiting from accounting adjustments and gains, Freddie Mac reported a second quarter profit of $821 million on a notable increase in revenues to $7.47 billion from last year's $1.59 billion.
Warren Buffett-owned Berkshire Hathaway (BRKA) reported a 14 percent increase in second quarter earnings, fueled by gains from derivatives trading, which soared to $1.53 billion from $453 million in the second quarter of last year. The firm earned $1,147 per share, while Wall Street analysts expected the company to earn $1,238 per share for the quarter.
Microsoft (MSFT), which recently struck a ten-year deal with Yahoo (YHOO) to share search engine technology and ad revenue, announced an agreement with French ad company Publicis to sell its Razorfish digital advertising unit.
The major averages regained some ground going into the close of trading, although they remained stuck in the red. The Dow closed down by 32.12 points or 0.3 percent at 9,337.95, the NASDAQ slipped by 8.01 points or 0.4 percent to 1,992.24 and the S&P 500 fell by 3.38 points or 0.3 percent to 1,007.10.
In economic news, South Korea's central bank will on Monday conclude its monetary policy meeting and announce its decision on interest rates. The bank is widely expected to keep rates on hold at 2 percent, but watchers will be looking for the bank's language about possibly moving out of its easing cycle and back to less fluid monetary policy.
Also, the International Monetary Fund again raised the economic outlook for South Korea, supported by government's stimulus measures and the prevailing low interest rate. Lifting the outlook, the IMF said the economy is set to shrink 1.8 percent in 2009 and recover with a 2.5 percent growth in 2010. Earlier in July, the lender had estimated a 3 percent contraction for this year.
Although, the IMF upgraded its estimate twice since July, it is still worse than the central bank forecast. The Bank of Korea expects GDP to decline 1.6 percent in 2009 and to grow 3.6 percent next year.
Finally, South Korea's L money supply, representing the country's broadest measure of money supply, rose 9.9 percent year-on-year in June, faster than a 9.5 percent growth in May, the Bank of Korea said on Monday. At the same time, the M2 money supply grew 10.3 percent annually compared to a 10 percent rise in the preceding month. The M1 money was up 19.9 percent, after rising 17.7 percent in the previous month.
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