RTTNews - The China stock market has closed modestly higher now in three straight trading days, adding just 35 points or 1.4 percent along the way. The Shanghai Composite Index has reclaimed the 2,675-point plateau, but now investors are anticipating a mild downside correction at the opening of trade on Wednesday.
The global forecast for the Asian bourses is mixed, thanks to conflicting economic data and corporate news - although many of the regional markets have posted sharp gains in recent sessions and are ripe for profit taking. The European markets ended broadly higher, while the U.S. bourses ended largely unchanged - and the Asian markets are tipped to follow the latter lead.
The SCI finished modestly higher on Tuesday, thanks to gains among the commodities, financials and property stocks.
For the day, the index gained 23.90 points or 0.90 percent to close at 2,676.68 after trading between 2,688.11 and 2,660.56. The Shenzhen Index rose 110.31 points or 1.07 percent to finish at 10,424.36 for a combined turnover of 227.97 billion yuan.
Among the gainers, China Unicom added 0.45 percent, while China Minsheng Banking Corp was up 1.38 percent, Bank of Communications climbed 1.25 percent, Shenzhen Development Bank rose 2.23 percent, Poly Real Estate Group gained 4.14 percent, China Vanke was up 0.99 percent, PetroChina added 1.39 percent, Sinopec rose 0.96 percent, Jiangxi Copper jumped 9.89 percent, Yunnan Copper surged 9.99 percent, Aluminum Corp of China Ltd (Chalco) gained 4.85 percent and Yunnan Aluminium soared 9.95 percent.
The lead from Wall Street is flat with a touch of downside as stocks saw choppy trading on Tuesday, finishing largely on the downside after a strong outing in the previous session. The major averages were unable to sustain any major moves, with the Dow and S&P 500 drifting into negative territory just ahead of the closing bell on Wall Street.
Stocks showed lack of conviction on the day, despite disappointing housing data released earlier in the day. Traders digested data from the U.S. Commerce Department showing a decline in housing starts in April to an annual rate of 458,000 units, compared to March's revised rate of 525,000 units. Economists had forecasted the figure to rise to a pace of 540,000 units from the rate of 510,000 units originally reported for March. The report showed that building permits were also down, slipping by 3.3 percent to an annual rate of 494,000 units.
Later in the day, President Barack Obama announced his goal for new fuel standards, proposing regulations that would require an average fuel economy of 35.5 miles per gallon for automobiles beginning in the year 2016. The new standards, covering car models ranging from 2012 to 2016, will require an average fuel economy standard of 35.5 mpg by the year 2016. The plan is projected to save 1.8 billion barrels of oil over the life of the program, with fuel economy gain averaging more than 5 percent per year. Further, the program will lead to a reduction of approximately 900 million metric tons in greenhouse gas emissions, the White House said.
On the earnings front, Dow component Hewlett Packard (HPQ) reported second quarter results shortly after the closing bell. The firm posted a net income of $1.7 billion or $0.70 per share, compared to $2.1 billion or $0.80 per share in the prior year period. Adjusted earnings for the quarter were $2.1 billion or $0.86 per share, compared to $2.2 billion or $0.87 per share in last year quarter. Analysts had expected the company to report earnings of $0.86 per share.
Meanwhile, Home Depot (HD) reported first quarter results that edged out Wall Street estimates. The company reported earnings for the quarter at $587 million or $0.35 per share compared to an earnings forecast of $0.29 per share. Medtronic (MDT), the world's largest medical technology firm, reported fourth quarter earnings at $0.22 per share, including one-time charges. However, leaving out these items, the profit met expectations with a figure of $0.82 per share.
In other news, three major banks intend to apply to repay funds borrowed under the government's TARP program, adding to trader speculation that the financial crisis may be easing. Specifically, financial giants Goldman Sachs (GS), JPMorgan Chase (JPM) and Morgan Stanley (MS) look to repay the bail-out funds received under the TARP program in October. The three firms have received a total of $45 billion in government aid. The government is expected to announce the results of the firms' filings no later than June 8.
The major averages had a shaky outing, finishing on opposite sides of the unchanged line. The Dow closed lower by 29.23 points or 0.34 percent to end at 8474.85, while the S&P 500 closed down by 1.58 points or 0.17 percent to finish at 908.13. On the other hand, the NASDAQ was able to hold on to thin gains, finishing up by 2.18 points or 0.13 percent to close at 1734.54.
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