One day after halting the three-day winning streak in which it gathered 100 points or 7 percent on its way to a six-month closing high, the South Korean stock market turned right back to the upside again on Thursday. The KOSPI broke through resistance at 1,400 points, although investors are uncertain if the market can hold that line in Friday's trade.
The global forecast for the Asian markets is mixed as many of the markets are overdue for profit taking following lengthy winning streaks. Investors also may be nervous ahead of the release of U.S. non-farm payroll data on Friday, which contributed to weakness among the U.S. and European markets. However, the financials may get a lift from the results of the stress tests for U.S. banks, which were released after the bell.
The KOSPI finished modestly higher on Thursday, lifted into positive territory by gains among the financials, airlines and industrials - although the gains were capped by weakness among the technology shares.
For the day, the index was up 7.63 points or 0.55 percent to close at 1,401.08 after trading between 1,389.82 and 1,415.48.
Among the gainers, Korea Exchange Bank surged 11.18 percent, while Woori Finance rose 0.45 percent, KB Financial moved up 2.09 percent, STX Pan Ocean added 4 percent, POSCO advanced 3.98 percent, Ssangyong Motor climbed 12 percent, Samsung Electronics was up 0.18 percent, Daewoo Shipbuilding jumped 4.44 percent, SK Telecom rose 1.11 percent, S-Oil advanced 3.67 percent, Korean Air Line gained 0.84 percent and Asiana Air Line edged up 0.22 percent.
Finishing lower, LG Electronics fell 3.74 percent, while LG Display LCD shed 1.27 percent, Hynix Semiconductor tumbled 4.75 percent, Hyundai Motor eased 3.48 percent, Kia Motors fell 2.20 percent, Hyundai Heavy Industries declined 1.20 percent and Samsung Heavy Industries was down 1.11 percent.
The lead from Wall Street is negative as stocks moved sharply lower over the course of the trading day on Thursday after failing to sustain an initial upward move. The major averages all pulled back firmly into negative territory after reaching multi-month intraday highs in early trading.
The downturn was partly due to profit taking, with traders cashing in on the market's recent gains ahead of the release of the results of the government's stress tests of the nation's 19 largest financial institutions.
Authorities officially revealed the results of the stress test, saying that 10 of the 19 banks tested needed to raise a total of $74.6 billion. Bank of America is required $33.9 billion, the report said, while Wells Fargo and GMAC require $11.5 billion each. Citigroup needs $5.5 billion, Regions Financial needs $2.5 billion, Suntrust requires $2.2 billion, KeyCorp needs $1.8 billion, Morgan Stanley needs $1.8 billion, Fifth Third Bancorp needs $1.1 billion and PNC needs $600 million. American Express, BB&T, Bank of New York Mellon, Capital One, Goldman Sachs, JP Morgan Chase, MetLife, State Street and USB do not require additional capital, the report said.
Some additional selling pressure was generated by the release of the results of the Treasury Department's auction of $14 billion worth of 30-year bonds, which attracted below average demand amid record government debt sales. The Treasury said the auction drew a high yield of 4.288 percent and a bid-to-cover ratio of 2.14. The bid-to-cover ratio, an indicator of demand, came in well below the 2.40 recorded for the previous auction of $11 billion worth of 30-year bonds.
The initial strength in the markets came after the Labor Department released a report showing an unexpected decrease in initial jobless claims in the week ended May 2. The report showed that jobless claims fell to 601,000 from the previous week's revised figure of 635,000. Economists had been expecting jobless claims to edge up to 635,000 from the 631,000 originally reported for the previous week. However, the report also showed a continued increase in continuing claims, which rose to a new record high of 6.351 million in the week ended April 25 from the preceding week's revised level of 6.95 million.
In corporate news, shares of General Motors (GM) ended the session down 3.6 percent after the auto giant reported a first quarter loss of about $6 billion. GM also revealed that it burned through $10.2 billion during the quarter due largely to a 47 percent drop in sales.
The major averages moved off their lows going into the close but remained firmly negative. The Dow closed down 102.43 points or 1.2 percent at 8,409.85, the NASDAQ closed down 42.86 points or 2.4 percent at 1,716.24 and the S&P 500 closed down 12.14 points or 1.3 percent at 907.39.
In economic news, the Sixth Islamic Financial Services Board Summit started Thursday in Singapore. Heng Swee Keat, Managing Director of Monetary Authority of Singapore, said the global sukuk market remains a relatively new asset class with much room to grow out. Sukuk is an Islamic financial certificate, similar to a bond in Western finance, which complies with Islamic religious law of Sharia,
In the first half of 2009, about US$1.3 billion in sovereign sukuk issuance will come from Malaysia, Indonesia and Singapore, Heng said. More private sector issuers are expected to tap the sukuk market and to attract new investors and clients, he added.
For comments and feedback: contact firstname.lastname@example.org