Market Commentary and Intraday News

Hong Kong Bourse May Extend Losses

272 days ago

(RTTNews) - The Hong Kong stock market has closed lower now in back-to-back sessions, although it has fallen just 15 points or 0.08 percent along the way. The Hang Seng Index finished just above the 20,100-point plateau, and now investors are expecting continued if mild losses when the market opens on Wednesday.

The global forecast for the Asian markets is mixed with a touch of upside as Spain saw a steep decline in borrowing costs at an auction on Tuesday amid speculation that the European Central Bank would resume its purchase of peripheral bonds. Further, markets are hopeful that a series of bilateral meetings between key Eurozone leaders may produce a lasting solution to the region's prolonged sovereign debt crisis. The European markets were higher and the U.S. bourses were down - and the Asian markets figure to split the difference.

The Hang Seng finished flat on Tuesday as gains from the property stocks and telecoms were offset by weakness from the oil companies and a mixed performance from the financial sector.

For the day, the index eased 4.18 points or 0.02 percent to finish at 20,100.09 after trading between 19,979.58 and 20,141.16on volume of 42.97 billion Hong Kong dollars.

Among the decliners, CNOOC shed 2.96 percent, while PetroChina eased 0.30 percent, Sinopec retreated 0.93 percent, Cheung Kong lost 0.46 percent and Bank of East Asia fell 1.69 percent.

Finishing higher, China Unicom spiked 3.61 percent, while Henderson Land added 0.53 percent, Sino Land collected 0.45 percent, Bank of China gained 0.34 percent, Bank of Communications was up 0.38 percent and Industrial and Commercial Bank of China rose 0.45 percent.

The lead from Wall Street is negative as stocks turned lower on Tuesday after failing to sustain an early upward move. The downturn came as some traders cashed in on the recent strength in the markets, although selling pressure remained relatively subdued.

The early strength followed optimism about the financial situation in Europe amid reports that the European Central Bank is considering buying bonds from troubled eurozone countries such as Italy and Spain in order to reduce borrowing costs.

Optimism about potential progress on addressing the Greek debt crisis also generated some buying interest, with Eurogroup chief Jean-Claude Juncker due to meet with Greek Prime Minister Antonis Samaras in Athens on Wednesday.

Nonetheless, the markets were unable to sustain the early upward move, as traders seemed somewhat reluctant to continue buying stocks following recent strength.

A lack of major U.S. economic data also contributed to the lack of follow-through and some traders subsequently looked to cash in on the early gains, which lifted the S&P 500 to its highest intraday level in over four years.

Among individual stocks, shares of Best Buy ended the day in the red after the consumer electronic retailer reported second quarter earnings that fell by much more than anticipated. Bookstore operator Barnes & Noble also moved lower despite reporting a much narrower than expected first quarter loss. On the other hand, Urban Outfitters moved higher after the apparel retailer reported better than expected second quarter results.

The major U.S. averages ended the day firmly in negative territory but off their worst levels of the day as the Dow fell 68.06 points or 0.5 percent to finish at 13,203.58, while the NASDAQ slipped 8.95 points or 0.3 percent to end at 3,067.26 and the S&P 500 dropped 4.96 points or 0.4 percent to close at 1,413.17.

In economic news, Hong Kong's annual inflation slowed to the lowest level in two years in July and was far below expectations, the Census and Statistics Department said on Tuesday. The overall consumer price index increased 1.6 percent annually in July, slower than the 3.7 percent gain in June. Economists had forecast inflation to ease to 3.4 percent. The latest figure was the lowest since July 2010, when prices rose 1.3 percent. In the three months ended July, on a seasonally adjusted basis consumer prices decreased on average 0.7 percent from the preceding three-month period.

Also, the People's Bank of China injected CNY 220 billion into the money market through reverse repurchase operations on Tuesday. The central bank said it added CNY 150 billion using seven-day reverse repos at a yield of 3.4 percent and CNY 70 billion via 14-day reverse repos at 3.6 percent.

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