RTTNews - One day after halting the three-day winning streak in which it had gathered more than 215 points or 7 percent, the China stock market turned right back to the upside on Wednesday. The Shanghai Composite Index closed above the 2,960-point plateau, although now analysts warn that the market could see a modest correction to the downside when it kicks off trade on Thursday.
The global forecast for the Asian markets is mixed with a touch of downside, but they are not expected to show much movement. Housing, technology and airline stocks could see solid gains, but they're likely to be countered by selling among the railroad stocks and the commodities. European markets ended firmly in negative territory, while the U.S. markets ended barely above the unchanged line - and the Asian markets are projected to trade slightly to the downside.
The SCI finished sharply higher on Wednesday, fueled by solid gains among the property stocks and airlines.
For the day, the index jumped 51.79 points or 1.78 percent to close at 2,967.59 after trading between 2,872.26 and 2,995.80 on turnover of 143.73 billion yuan. There were 811 gainers and 50 decliners, with 5 stocks finishing unchanged. The Shenzhen Index added 2.84 percent to finish at 1,003.27 points.
Among the gainers, Air China surged by the 10 percent daily limit, while Poly Real Estate gained 2.24 percent, Shanghai Lujiazui Finance climbed 3.41 percent, Shimao Co added 2.5 percent, Gemdale Corporation was up 2.08 percent, China Vanke gained 2.43 percent, China Southern Airlines surged 8.22 percent, Hainan Airlines jumped 8.44 percent, China Eastern Airlines gained 5.05 percent and Shanghai Airlines added 4.61 percent.
Wall Street offers not much in the way of guidance as stocks finished Wednesday's session little changed, with the day's trading marred by choppy movement despite largely positive news on the economic front. The major averages closed only slightly higher after turning in another lackluster trading session. Some traders remained on the sidelines ahead of the Thursday's weekly jobless claims report, which is expected to show a modest decrease in first-time claims for unemployment benefits.
Some of the day's early upside came on the heels of data on new home sales, which increased by much more than expected in the month of July, according to a report released by the Commerce Department. The report showed that new home sales surged up by 9.6 percent to an annual rate of 433,000 in July from the revised June rate of 395,000. Economists had been expecting sales to edge up to 390,000 from the 384,000 originally reported for the previous month.
Some positive sentiment was also generated by a report from the Commerce Department showing a much bigger than expected increase in durable goods orders in the month of July, with the growth largely due to a substantial rebound in orders for transportation equipment. The report showed that new orders for durable goods jumped 4.9 percent in July following a revised 1.3 percent decrease in June. Economists had expected orders to increase by 3.2 percent compared to the 2.2 percent decrease that had been reported for the previous month.
Excluding an 18.4 percent increase in orders for transportation equipment, durable goods orders increased by a much more modest 0.8 percent in July compared to a 2.5 percent increase in June. The increase came in below economist estimates of 1.0 percent growth.
In other news, Atlanta Federal Reserve Bank President Dennis Lockhart said earlier today that although he believes the worst of the economic downturn has passed, the economic recovery will be slow and will contribute to a protracted period of high unemployment.
The major averages showed a slight upward move going into the close, ending the day just above the unchanged line. The Dow closed up by 4.23 points at 9,543.52, the NASDAQ gained 0.20 points to finish at 2024.43 and the S&P 500 rose by 0.12 to 1,028.12.
In corporate news, CNOOC, a unit of China National Offshore Oil Corp., reported a decline in first-half profit, reflecting a fall in oil and gas sales as well as a sharp drop in realized oil price. The company noted that its total net oil and gas production increased 15.2 percent year-over-year, with 20.1 percent growth in crude oil production, while natural gas production was slightly down over the prior year.
The Hong Kong-based oil and gas company's net profit for the first half declined to RMB 12.40 billion from RMB 27.54 billion in the previous year. Earnings for the period were RMB 0.28 per share, down from RMB 0.62 per share in the same period last year. Revenues for the half year were RMB 40.65 billion. CNOOC reported oil and gas sales of RMB 32.52 billion, down from RMB 54.46 billion in the prior year.
During the first half, the company realized oil price at US$49.35 per barrel, down from US$102.49 per barrel in the preceding year. Average realized gas price increased 6.6 percent to US$3.90 per thousand cubic feet from US$3.66 per thousand cubic feet last year, benefited from price change of new contracts.
Also, China Crescent Enterprises said on Wednesday that it has selected Chinese telecom equipment manufacturer Huawei Technologies for its first planned WiMAX project in Africa. The company has targeted Kenya as its next foreign market expansion opportunity. China Crescent anticipates the first phase of its first WiMax project in Africa to be online in the first quarter of fiscal year 2010. The company reported $17 million in revenue and an over 200 percent net income increase to $1.1 million through the first six months of 2009.
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