RTTNews - The China stock market has finished higher in two of the last three trading days since snapping the three-day losing streak in which it had lost nearly 80 points or 3 percent, ahead of the four-day weekend holiday marking the Dragon Boat Festival. The Shanghai Composite Index has regained the 2,600-point plateau, and now analysts predict that the market could challenge the 2,650-point level in Monday's trade.
The global forecast for the Asian markets is optimistic thanks to positive economic and corporate releases at the end of last week. U.S. auto giant General Motors is expected to declare bankruptcy on Monday, although it has already been priced in by many of the markets - and it may affect auto stocks throughout the region. The European markets were mostly higher on Friday, and the U.S. bourses were sharply up - and the Asian markets are forecast to move higher as well.
The SCI was sharply higher on Wednesday, fueled by gains among the oil companies and the financial shares.
For the day, the index added 44.36 points or 1.71 percent to close at 2,632.93 after trading between 2,592.79 and 2,635.31. The Shenzhen Index was up 105.62 points or 1.05 percent to finish at 10,127.92 for a combined turnover of 161.26 billion yuan. Gainers led losers by 440 to 417 in Shanghai and 414 to 339 in Shenzhen.
Among the gainers, PetroChina surged 4.35 percent, while Sinopec added 2.37 percent, China Construction Bank added 2.69 percent, Industrial and Commercial Bank of China was up 2 percent, China Minsheng Banking Corp jumped 6.85 percent and Industrial Bank rose 5.1 percent.
The lead from Wall Street is broadly positive as stocks saw some further upside over the course of the trading day on Friday after a considerable upward move in the previous session. A late-session rally helped the major averages to finish the month of May on a high note, further building on recent gains.
Early this morning, traders digested a revised May consumer sentiment report from Reuters and the University of Michigan that showed its best results in eight months. The revised reading came in at 68.7, higher than the previously reported reading of 67.9. The result was also higher than April's final level of 65.1. Analysts expected the survey to yield a reading of 68.0.
Separately, the Commerce Department said that gross domestic product for the first quarter contracted, although at a slower rate than previously estimated. Specifically, the data said that gross domestic product fell 5.7 percent in the first quarter compared to the advance estimate of a 6.1 percent decrease. Economists had been expecting the pace of contraction to be revised to 5.5 percent.
Meanwhile, optimism was limited by manufacturing data from the Chicago area that continued to show a notable slowdown in the region. The ISM-Chicago said its index of activity in the manufacturing sector fell to 34.9 in May from 40.1 in April, with a reading below 50 indicating a contraction. Economists expected the index to edge up to a reading of 42.0.
On the corporate front, automaker General Motors (GM) plans to file for bankruptcy protection on Monday, according to reports. Most of the company's assets would be sold to a new company sponsored by the U.S. Treasury Department. UAW-represented employees have ratified modifications to the GM-UAW 2007 national labor agreement. The amended agreement covers about 54,000 hourly employees located in 46 U.S. facilities and is expected to help GM restructure when it enters bankruptcy.
In other news, President Barack Obama announced the establishment of a cyber security office. The new office is expected to establish a system that will restrict outside access to government networks, which have been identified as an area of concern by the administration. In addition to announcing the new office, Obama also stated his goal for a new education initiative aimed at increasing awareness of cyber security threats.
The major averages soared in the last 30 minutes of trading, closing near their best levels of the day. The Dow closed up 96.53 points or 1.2 percent at 8500.33, the NASDAQ closed up 22.54 points or 1.3 percent at 1774.33, and the S&P 500 finished up 12.31 points or 1.4 percent at 919.14. The gains helped the major averages close higher for both the week and the month of May. The Dow rose 4.1 percent for the month, adding to the gains posted in both March and April. The NASDAQ and the S&P 500 posted monthly gains of 3.3 percent and 5.3 percent, respectively.
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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