RTTNews - The China stock market has posted gains now in consecutive trading days, gathering more than 100 points or 3.5 percent on its way to a fresh 13-month closing high. The Shanghai Composite Index is nearing resistance at 3,200 points, and investors are optimistic that the market can crack that barrier at the opening of trade on Thursday - particularly if some key economic data pans out.
Thirty minutes after the market opens, China is poised to announce Q2 GDP numbers. Analysts are looking for a 7.8 percent increase on year following the 6.1 percent annual expansion in the first quarter. Also due are numbers for retail sales, inflation, industrial production and fixed-asset investment.
The global forecast for the Asian markets is broadly optimistic, thanks to solid earnings reports, encouraging remarks from the FOMC and some decent economic data out of the world's largest economy. A rebound among the commodities and crude oil prices adds to the positive sentiment. The European and U.S. markets finished sharply higher, and the Asian bourses are also predicted to show solid gains.
The SCI finished sharply higher on Wednesday, led by gains among automobile stocks, steel shares, coal producers and other commodities.
For the day, the index jumped 43.39 points or 1.38 percent to close at 3,188.55 after trading between 3,156.62 and 3,188.91. The Shenzhen Index was up 88.19 points or 0.68 percent to finish at 13,079.26 for a combined turnover of 333.4 billion yuan. Winners outnumbered losers by 537 to 302 in Shanghai and 427 to 304 in Shenzhen.
Among the gainers, Hangzhou Iron and Steel, Yuannan Copper, Jiaozuo Wanfang Aluminum, Jingyuan Coal and Shenhuo Coal all were up by the daily limit of 10 percent, while Chang'an Auto rose 8.67 percent, Guizhou Tyre added 6.41 percent and Baosteel gained 1.46 percent.
Wall Street offers a sharply positive lead as stocks continued to move higher throughout much of Wednesday's trading session after a strong start, fueled by trader reaction to the day's earnings data. The major averages all posted substantial gains on the day, extending their gains for the third straight session.
Early strength came amid reaction to a slew of earnings reports, spearheaded by Intel (INTC), which beat analysts' second quarter earnings estimates. While Yum! Brands (YUM) also beat expectations, Abbott Labs (ABT) and Altera (ALTR) reported earnings that came in line with estimates.
Stocks were further bolstered in the afternoon following the Federal Reserve's announcement that it expects a less severe economic contraction in 2009 and a moderately stronger recovery in 2010. The minutes of the June meeting of the Federal Open Market Committee showed that the GDP estimates were revised to show a smaller than expected decrease in 2009 and a bigger than expected increase in 2010. At the same time, the Fed said it expects the unemployment rate to come in higher than previously estimated based on the incoming employment data.
The day's influx of economic figures was kicked off this morning by a Labor Department report showing that consumer prices saw a 0.7 percent increase in June compared to the previous month. Economists had projected an advance of about 0.6 percent. Compared to the same period last year, consumer prices were down 1.4 percent, the largest year-over-year decline since 1950. Core prices, which exclude the volatile food and energy sectors, advanced 0.2 percent compared to the previous month. Economists had expected an increase of 0.1 percent.
A separate report from the Federal Reserve indicated a continued decrease in industrial production in the month of June, although the rate of decline slowed by more than economists had been anticipating. With the slowdown, industrial production fell at its slowest pace since the 1.3 percent jump that was seen in October of 2008.
The major averages saw further upside in late day trading, finishing near their best levels of the day. The Dow closed up by 256.72 points or 3.1 percent at 8,616.21, the NASDAQ climbed 63.17 points or 3.5 percent to 1,862.90, and the S&P 500 rose 26.84 points or 3 percent to 932.68.
In economic news, China's foreign exchange reserves surged in June, reflecting an increase in confidence among foreign investors about the economy's recovery, an official report showed Wednesday.
Data released by the People's Bank of China showed that the foreign exchange reserves stood at US$ 2.131 trillion at the end of June, coming in higher than economists' expectations of US$ 2.021 trillion. China is only country to have reserves totaling more than US$ 2 trillion.
The central bank said the reserves increased by US$ 42.1 billion in June compared to a US$80.6 billion in May. Meanwhile, in the second quarter, the foreign exchange reserves climbed US$177.85 billion compared to a US$7.7 billion rise in the first quarter.
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