RTTNews - The China stock market has ended higher now in consecutive trading days, jumping more than 130 points or 4.8 percent en route to a 10-month closing high. The Shanghai Composite Index broke through resistance at the 2,700-point plateau, and now investors are betting that the market has a bit more upside remaining when it opens on Tuesday.
The global forecast for the Asian markets is solidly upbeat, thanks to better than expected economic data around the globe that suggests the economic slowdown may be losing steam. Auto makers may be in focus after General Motors officially declared bankruptcy - although the move has largely been priced in and actually is being met with some optimism. The European and U.S. markets ended sharply higher, and the Asian markets are tipped to trade in the green as well.
The SCI finished sharply higher on Monday, lifted by positive manufacturing data. The commodities ended higher, as did the property shares.
For the day, the index soared 88.35 points or 3.36 percent to close at 2,721.28 after trading between 2,668.40 and 2,726.72. The Shenzhen Component Index added 293.42 points or 2.9 percent to finish at 10,421.34 for a combined turnover of 225.23 billion yuan. Gains outnumbered losses by 762 to 90 in Shanghai and 628 to 93 in Shenzhen.
Among the gainers, Shandong Gold Mining surged by the daily limit of 10 percent, while PetroChina jumped 4.89 percent, Sinopec was up 1.06 percent, Zhongjin Gold jumped 9.49 percent, China Vanke gained 4.31 percent and Poly Real Estate added 5.71 percent.
Wall Street puts forth a broadly positive lead as stocks were able to extend their gains for a third straight session on Monday, seeing a notably strong outing for the first trading day of June. The major averages all finished firmly in positive territory, with the NASDAQ and S&P 500 closing at their best levels of the year. Trader confidence was boosted by an influx of largely promising economic figures, with data from the Institute for Supply Management showing a slower pace of contraction in activity in the manufacturing sector in the month of April.
The report showed that the index of activity in the manufacturing sector rose to 42.8 in May from 40.1 in April, with a reading below 50 indicating a contraction. Economists had been expecting the index to edge up to a reading of 42.0. A turnaround in new orders contributed to the improvement in the sector, with the new orders index climbing to 51.1 in May from 47.2 in April. This marked the first time the index has been above 50 since November of 2007.
Further, construction spending unexpectedly increased in the month of April, according to a report released by the Commerce Department, with the unexpected growth reflecting a notable increase in spending on private construction. The Commerce Department also released a separate report showing that personal income unexpectedly rose in the month of April, with the increase partly due to the reduced taxes and increased social benefit payments associated with the government's economic stimulus plan.
On the corporate front, auto giant General Motors officially filed for bankruptcy on Monday morning. The Obama administration said Sunday that it has deemed GM's reorganization plan viable and will provide the company $30.1 billion in debtor-in-possession financing. President Barack Obama addressed GM's bankruptcy filing Monday, stressing that the government is acting as reluctant shareholders with a 60 percent stake in the company and hoping for a swift bankruptcy process.
Obama said that while GM's trip through bankruptcy will likely be longer than Chrysler's swift 31 days, he hopes that the embattled automaker will emerge from the Chapter 11 process quickly. The president defended his administration's actions with regarding to the automaker, stating that his people inherited a severe financial crisis unlike any we have seen in our time that put the government in an unwelcome position.
The major averages saw additional upside in the afternoon dealing and finished just off of their best levels of the day. The Dow closed up 221.11 points or 2.6 percent, at 8,721.44, the NASDAQ finished up by 54.35 points or 3.1 percent, at 1,828.68, and the S&P 500 rose 23.73 points or 2.6 percent to 942.87.
In economic news, China's purchasing managers' index posted a score of 53.1 in May, the China Federation of Logistics and Purchasing said on Monday, easing from 53.5 in April. Export orders moved up to 50.1 in May from 49.1 in April. The index remained above 50 for the third consecutive month following five straight months below that level. A reading above 50 indicates growth, while a score below 50 represents contraction based on a survey of more than 700 businesses in 11 categories.
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