The Hong Kong stock market snapped its modest two-day losing streak on Thursday, being forced to wait an extra day after the Hang Seng Index was closed on Wednesday because of Tropical Storm Kammuri. The market regained support at 22,000 points on Thursday, but analysts say that it's likely to hand it right back on Friday, following most of the rest of the region to the downside. The market may get a boost from the opening of the Olympics in Beijing, however, including some sites in Hong Kong.
The global forecast paints a gloomy outlook for the Asian markets as weak economic news out of the United States rekindled concerns about the health of the world's largest economy. Disappointing corporate earnings and a rebound in the price of crude oil also helped to send the U.S. markets significantly lower, and the Asian bourses are forecast to follow suit on the final day of the trading week.
The Hang Seng finished modestly higher on Thursday after opening sharply to the upside. The financials and retailers were a source of strength for the index, but the gains were muted by a selloff among the airlines, shipping companies and commodities.
For the day, the index added 154.45 points or 0.7 percent to close at 22,104.20 after trading between 21,915.28 and 22,424.54 on turnover of 75.9 billion Hong Kong dollars.
Among the gainers, Esprit Holdings rallied 3.8 percent, while Foxconn International Holdings gained 3 percent, Li & Fung was up 3.1 percent, Yue Yuen Industrial Holdings added 1.4 percent, HSBC Holdings rose 1.8 percent, Hang Seng Bank gained 3.2 percent and Standard Chartered Bank was up 4.4 percent.
Finishing lower, Cathay Pacific Airways slid 4 percent, while China Southern Air lost 7 percent, China Eastern Air tumbled 7.3 percent, Air China was down 6.6 percent, Lenovo fell 2.6 percent, China Shipping Container Lines Co. retreated 5.8 percent, China Shipping Development tumbled 8 percent, China Cosco slid 5.8 percent, Hunan Nonferrous Metals tumbled 11.4 percent, Jiangxi Copper slid 5.5 percent, Angang Steel lost 5.4 percent and Xingyi Copper tumbled 8.7 percent.
Wall Street provides a decidedly negative lead as stocks ended Thursday's session sharply lower following the release of a government report that showed weekly jobless claims rose to their highest level in over six years. Some disappointing corporate data, along with a rise in oil prices, also contributed to the negative sentiment.
Before the markets opened, the Labor Department released its weekly jobless claims report, showing that the number of people filing initial claims for jobless benefits continued to increase in the week ended August 2, rising their highest level in over six years. The report showed that jobless claims rose to 455,000 from the previous week's unrevised figure of 448,000. The increase came as a surprise to economists, who had been expecting jobless claims to fall to 420,000.
Selling pressure accelerated in the final hour of trading after credit ratings agency Moody's Investors Service announced that it has placed the long-term ratings of American Express (AXP) on review for a possible downgrade. Earlier in the day, AIG (AIG) released disappointing quarterly results, while Wal-Mart Stores (WMT) said its same store sales rose less than expected in July.
Meanwhile, crude oil closed above $120 a barrel for the first time in three sessions, recouping a small portion of its recent slide. Light sweet crude for September delivery moved to $120.02 a barrel, up $1.44 on the session. Oil gained as a pipeline in Turkey responsible for a million barrels of oil per day may remain shut for about two weeks. The pipeline, which carries crude to the Mediterranean from Azerbaijan, has been closed since an explosion on Tuesday.
The major averages saw additional selling pressure in the final hour of the day, although they all ended the day off of their session lows. The Dow closed down 224.64 points or 1.9 percent at 11,431.43, the Nasdaq closed down 22.64 points or 1 percent at 2,355.73 and the S&P 500 closed down 23.13 points or 1.8 percent at 1,266.06.
In economic news, official foreign currency reserve assets of Hong Kong amounted to $157.7 billion at the end of July, up from $157.6 billion recorded at the end of June, the Monetary Authority reported Thursday. Including unsettled forward contracts, Hong Kong's foreign currency reserve assets amounted to at $157.7 billion. Further, the monetary authority said the total foreign currency reserve assets represent over seven times the currency in circulation or about 40% of Hong Kong dollar M3.
In corporate news, Malaysia's Stanton Technologies will transmit the Beijing 2008 Olympic Games to over 400 million China Mobile subscribers and worldwide internet users, the company said on Wednesday. The company will provide mobile TV services to the subscribers of the largest mobile phone operator in China, thanks to an agreement with China Teleformation Culture Media Co Ltd. China Mobile has an estimated 400 million subscribers.
Also, China Direct saw second quarter revenue increase to $77.6 million, the company sad on Friday, up from .5 million for the same quarter last year. Second quarter net income increased to a record $7.5 million, up from $2.3 million for the same quarter in 2007.
Finally, PC maker Lenovo Group saw a 65 percent increase in quarterly earnings, the company said on Thursday, $110.49 million from April to June, up from $66.84 million a year ago. It was the company's slowest growth in a year because of weakening demand from the United States and China, but it still beat analyst expectations of $107.47 million.
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