RTTNews - One day after ending the three-day winning streak in which it had gathered nearly 35 points or 3 percent, the South Korean stock market headed right back to the upside on Tuesday, albeit barely. The KOSPI is clinging to support at 1,390 points, although investors are expecting the market to fall through that level at the opening of trade on Wednesday.
The global forecast for the Asian markets is laced with pessimism, with continued selling pressure expected for the financials and commodities. Some disappointing economic data out of the United States adds to the negative sentiment that suggests that a global recovery might not be as close as many had thought. The European markets were sharply lower, while the U.S. markets also ended in the red - and the Asian bourses are also expected to follow suit and trade lower.
The KOSPI finished barely higher on Tuesday, as gains among the financials were offset by weakness among the industrials and automobile producers. For the day, the index was up 1.62 points or 0.12 percent to close at 1390.07 after trading between 1,385.76 and 1,409.10. Volume was 462.6 million shares worth 4.67 trillion won.
Among the actives, Ssangyong Motor fell by the daily limit of 15 percent, while KB Financial Group rose 1.3 percent, Shinhan Financial Group gained 1.4 percent, Daewoo Engineering & Construction was down 6.2 percent and Kia Motors declined 3.8 percent.
The lead from Wall Street is firmly negative as stocks turned sharply lower as traders digested consumer confidence figures that fell short of expectations after kicking off Tuesday's session showing a mild upward move. The major averages all finished solidly in negative territory, offsetting Monday's gains.
A report from the Conference Board said its consumer confidence index fell to 49.3 in June from a revised 54.8 in May. The decrease surprised economists, who had expected the index to edge up to 55.3 from the 54.9 originally reported for the previous month. The decrease reflected less favorable assessments of both current conditions and the near-term outlook.
Separately, the Institute for Supply Management - Chicago said its index of activity in the manufacturing sector jumped to 39.9 in June from 34.9 in May, although a reading below 50 indicates a continued contraction. Economists had been expecting the index to increase to a reading of 39.0.
Earlier, the S&P Case-Shiller Home Price Index, a closely watched measure of home prices, showed a 0.6 percent decline from March to April, according to a survey of prices in 20 U.S. cities. Home prices were down 18.1 percent compared to the same period last year.
On the corporate front, chipmaker Broadcom (BRCM) announced that it raised its tender offer to acquire all of the outstanding shares of common stock of Emulex (ELX) to $11.00 per share in cash, representing a total equity value of about $912 million. Emulex said its Board of Directors would review the terms of the revised offer.
In earnings news, private education firm Apollo Group (APOL) reported third quarter net income of $1.26 per share, compared to $0.85 per share in the prior year quarter. The earnings beat Wall Street analyst forecasts of $1.12 per share. The stock climbed by 7.8 percent on the day.
Further, tax preparer H&R Block (HRB) reported fourth quarter net income of $2.09 per share, compared to $1.66 per share in the year-ago quarter. The results edged out analyst expectations of $2.05 per share. H&R Block also said it expects fiscal 2010 earnings in the range of $1.60 to $1.80 per share. Analysts currently expect the company to earn $1.66 per share for the year. The stock rose by 10 percent on the day as traders reacted to the news.
The major averages moved off their worst levels late in the session but still posted notable losses. The Dow closed down by 82.38 points or 1 percent at 8,447.00, the NASDAQ dipped by 9.02 points or 0.5 percent to 1,835.04, and the S&P 500 fell 7.91 points or 0.9 percent to 919.32.
In economic news, South Korea will on Wednesday announce June numbers for imports, exports and trade balance, as consumer price index data. Imports are expected to fall 33.5 percent on year after the 40.3 percent annual decline in May. Exports are forecast to fall 18.7 percent on year after the 28.5 percent contraction in the previous month. The trade balance is expected to reflect a deficit of $14.8 billion following the $11.8 billion shortfall a month earlier. Inflation is expected to come in at 2.3 percent, easing from 2.7 percent in May.
Also, the Bank of Korea said on Tuesday that the confidence among manufacturers increased further in July. The business survey index, measuring manufacturers' business sentiment, rose to 78 in July from 76 in the preceding month. The index has been rising steadily since February this year. A reading below 100 indicates pessimists outnumber the optimists. Meanwhile, on a seasonally adjusted basis, the index climbed to 82 in July from 74 in June.
Finally, industrial production in South Korea declined 9 percent year-on-year in May, faster than an 8.2 percent fall in April, the National Statistical Office said Tuesday. Economists expected a drop of 8.6 percent. After adjusting for working day effects, industrial output dropped 7.8 percent in May compared to a 9.4 percent decline in the preceding month. Month-on-month, industrial output rose 1.6 percent in May, slower than a 2.5 percent rise in April.
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