Market Commentary and Intraday News

Hong Kong Bourse May Halt Slide

308 days ago

(RTTNews) - The Hong Kong stock market turned right back into the red again on Wednesday, one session after it had ended the two-day losing streak in which it had given away almost 190 points or 0.95 percent. The Hang Seng Index finished just above the 20,050-point plateau, and now traders are looking for a measure of traction when the market kicks off trade on Thursday.

The global forecast for the Asian markets is mixed following inconclusive economic data from the United States, as well as uncertain news from Europe. Policymakers of the Bank of England were unanimous in maintaining quantitative easing at GBP 375 billion early this month, the minutes of the August meeting revealed on Wednesday. Also, reports suggest that Greece is set to seek an extension of the austerity program agreement with its lenders. The European and U.S. markets were mixed, and the Asian bourses figure to follow suit.

The Hang Seng finished sharply lower on Wednesday following losses from the resource stocks.

For the day, the index plummeted 239.39 points or 1.18 percent to finish at 20,052.29 after trading between 20,016.03 and 20,135.00 on volume of 42.35 billion Hong Kong dollars.

Among the actives, China Coal dropped 3.7 percent and China Mobile shed 1.2 percent, while Li & Fung jumped 1.4 percent and Standard Chartered spiked 3.6 percent.

The lead from Wall Street remains inconclusive as stocks turned in another lackluster performance on Wednesday, extending the sideways move seen over the past week. Traders expressed continued uncertainty about the near-term outlook for the markets following a mixed batch of U.S. economy data.

The New York Federal Reserve reported an unexpected contraction in regional manufacturing activity, as its general business conditions index dropped to - 5.9 in August from 7.4 in July, with a negative reading indicating a contraction in regional manufacturing activity. Economists had expected the index to show 7.0.

Meanwhile, the Federal Reserve said industrial production increased by 0.6 percent in July compared to economist estimates for an increase of about 0.5 percent. The growth reflected increased output in each of the manufacturing, mining, and utilities sectors.

Also, the National Association of Home Builders said that its index of homebuilder confidence climbed to 37 in August from 35 in July - beating forecasts for an unchanged reading. With the increase, the homebuilder confidence index rose to its highest level since coming in at 39 in February of 2007.

The Labor Department also released a report showing that consumer prices unexpectedly came in unchanged for the second consecutive month in July.

Among individual stocks, shares of Target moved to the upside after the discount retailer reported better than expected Q2 earnings and raised its full-year guidance. Also, apparel retailer Abercrombie & Fitch also turned in a strong performance after reporting second quarter earnings that fell year-over-year but came in above estimates.

Meanwhile, shares of Deere tumbled by 6.3 percent after the agricultural equipment giant reported third quarter earnings that increased by less than analysts had expected. The company also lowered its full-year revenue guidance.

The major U.S. averages were mixed on Wednesday for the fifth time in the past six sessions. The Dow edged down 7.36 points or 0.1 percent to finish at 13,164.78, while the NASDAQ rose 13.95 points or 0.5 percent to end at 3,030.93 and the S&P 500 inched up 1.60 points or 0.1 percent to 1,405.53.

In economic news, Hong Kong will on Thursday provide the unemployment rate for July; in June, the rate was 3.2 percent.

Also, the non-performing loans ratio of Chinese banks remained stable in the second quarter, the China Banking Regulatory Commission said on Wednesday. The average non-performing loan ratio in the banking system came in at 0.9 percent, unchanged from the first quarter.

At the same time, capital adequacy ratio was 12.9 percent at the end of the second quarter, higher than the 12.7 percent seen in the previous quarter. The core capital adequacy ratio climbed to 10.4 percent from 10.3 percent.

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