RTTNews - The South Korean stock market has alternated positive and negative closes over the last five trading days since the end of the four-day winning streak in which it had gathered more than 40 points or 3 percent. The KOSPI remains below resistance at 1,400 points, and analysts do not believe the market will break through that barrier by the opening of trade on Tuesday.
The global forecast for the Asian markets calls for a mild decline - more on inertia than anything else after a round of profit taking took hold on Monday. The lack of economic data or other stimuli may result in thin trade, which could exaggerate movement. The European markets ended sharply lower, and the U.S. bourses ended nearly unchanged, and the Asian markets are tipped to fall right in between with modest declines.
The KOSPI finished barely lower on Monday, as profit taking among the shipbuilders was enough to nudge the index into negative territory. For the day, the index eased 1.41 points or 0.10 percent to close at 1393.30 after trading between 1,387.41 and 1,411.27.
Among the decliners, STX Pan Ocean lost 3.2 percent, while Hyundai Heavy Industries fell 3.1 percent, Hyundai Motor declined 4.44 percent, Kia Motors dropped 2.94 percent and KB Financial Group fell 2.67 percent.
Finishing higher, Korea Exchange Bank jumped 7 percent, while Samsung Engineering was up 4.46 percent, Samsung Electronics added 1.1 percent, LG Display rose 2.8 percent and Hite Holdings gained 4.59 percent.
The lead from Wall Street is virtually flat as stocks finished Monday's session little changed after traders went bargain hunting in the afternoon following a morning sell-off. The major averages finished on opposite sides of the unchanged line but only by minuscule margins. The lack of significant movement came as the day's session was marred by low volume and a lull in economic data. Traders did some profit taking early on but were enticed back into the market following some speculation about a near-term economic recovery.
In the news, the annual Apple Worldwide Developers Conference kicked off in San Francisco, with Apple (AAPL) announcing a new web browser, a remodeled MacBook and a fresh version of the iPhone. Also, Chrysler's sale of assets to Fiat was be delayed by the U.S Supreme Court. A group of Indiana pension funds have filed an emergency appeal with the court to block the sale.
Packaged food supplier General Mills (GIS) was also in focus after the company said it is on track to exceed its prior earnings targets for the fiscal year ending May 31, 2009 due to good operating performance and a lower fourth-quarter tax rate. The forecast, however, assumes no mark-to-market valuation as well as gains from asset sales. The company also provided its initial segmental sales outlook for 2010. The stock rose by 4.0 percent on the day, setting its best closing level in over three months.
The Federal Reserve continued its treasury buyback program Monday, completing the first of two quantitative easing moves for the week. The New York Fed purchased $7.50 billion worth of securities with maturity dates ranging from December of 2013 to April of 2016.
The day's buyback saw a total of $29.97 billion in treasuries submitted for the purchase. Overall, the Fed has purchased a total of $153.02 billion since the program began on March 25. Some speculation has risen as to whether the Fed will raise interest rates to combat the effects of expected inflation following its quantitative easing actions.
Meanwhile, President Barack Obama is ramping up the economic stimulus spending, pledging to create over 600,000 jobs this summer. Obama made the announcement Monday morning, stating that he will accelerate the implementation of the $787 billion stimulus in the next 100 days.
The major averages closed little changed after the day's losses were largely offset by a late session rally. While the Dow finished up by 1.36 or less than a tenth of a percent at 8,764.49, the NASDAQ dipped by 7.02 or 0.4 percent to 1842.40, and the S&P 500 fell 0.95 or 0.1 percent to 939.14.
In economic news, South Korea will on Tuesday announce May numbers for its producer price index. Analysts are predicting a 0.6 percent increase on year, easing from the 1.5 percent annual expansion in April.
Also, South Korea's velocity of money, or the speed at which the money circulates within the economy, dropped to its lowest level in the history of the series in the first quarter, reports said citing the Bank of Korea.
The velocity of money, calculated by dividing the GDP by the M2 money supply, decreased to 0.687 in the first quarter. This has been the first time ever the value has fallen below the 0.7 mark. In the fourth quarter, the value was 0.703.
Velocity of money is important to measure the rate at which money in circulation is used for purchasing goods and services. The slowdown in the velocity of money was a sign of stagnant conditions in the economy, reports said.
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