One day after writing a finish to the modest two-day winning streak in which it gathered more than 80 points or 3.3 percent, the China stock market headed right back into positive territory again on Tuesday. The Shanghai Composite Index finished just shy of resistance at 2,375 points, although analysts expect the market to break through that barrier at the opening of trade on Wednesday.
The global forecast for the Asian markets is generally upbeat, with modest upside correction expected in most regional bourses after a couple of days of heavy losses. The automobile stocks have been under pressure in recent sessions but could level off - while the financials also are predicted to level off after heavy profit taking. The European markets finished sharply higher, while the U.S. markets ended more modestly in the green - and the Asian markets are likely to fall somewhere in between.
The SCI finished modestly higher on Tuesday, lifted into positive territory by gains among the financials.
For the day, the index added 15.17 points or 0.64 percent to close at 2,373.21 after trading between 2,299.16 and 2,375.71. The Shenzhen Index rose 71.54 points or 0.8 percent to end at 8,981.95 for a combined turnover of 200.03 billion yuan. Gainers outnumbered losses by 481 to 368 in Shanghai and 395 to 322 in Shenzhen.
Among the gainers, China Pacific Insurance was up by the daily limit of 10 percent, while China Life rose 4.22 percent, CITIC Securities rose 2.25 percent, Sinolink Securities added 6.66 percent, Ping An Insurance gained 4.3 percent and Haitong Securities ended 4.1 percent higher.
Wall Street offers a positive lead as stocks moved higher throughout much of the trading session on Tuesday, although the major averages gave back some ground going into the close. The strength in the markets came as traders used the weakness in the two previous sessions as a buying opportunity.
Weak economic data helped to limit the upside for the markets, with a report from Standard and Poor's showing that home prices fell at a record annual rate in January. The report showed that the S&P/Case-Shiller 20-City Composite Home Price Index for January fell 19.0 percent compared to the same month a year ago, reflecting an acceleration from a revised 18.6 percent year-over-year decline in December.
Separately, the Institute for Supply Management - Chicago said its index of activity in the Chicago-area manufacturing sector fell to 31.4 in March from 34.2 in February, with a reading below 50 indicating a contraction in the sector. Meanwhile, the Conference Board's consumer confidence index edged up to 26.0 in March from a record low reading of 25.3 in February, although economists had been expecting a somewhat more significant increase by the index to a reading of 28.0.
In other news, the Senate Finance Committee examined the progress of the Troubled Asset Relief Program in a hearing on Tuesday, with the results of the first six months of the $700 billion financial bailout determined to have been unsteady. The program puts taxpayers at risk for $2.9 trillion, the Special Inspector General for the TARP Neil Barofsky said at the hearing.
Additionally, General Motors (GM) and Ford (F) announced new rounds of incentives, including payment protection for job losers, to boost customer confidence and jump-start vehicle sales. GM unveiled its GM Total Confidence plan, whereby customers can get payment protection for the first 24 months of ownership. Meanwhile, Ford launched its new Ford Advantage Plan, under which Ford will provide 12 months of payment protection.
The major averages pulled back well off their highs for the session in late day trading but managed to remain firmly positive. The Dow closed up 86.90 points or 1.2 percent at 7,608.92, the NASDAQ closed up 26.79 points or 1.8 percent at 1,528.59 and the S&P 500 closed up 10.34 points or 1.3 percent at 797.87.
In corporate news, offshore oil producer CNOOC saw an annual growth of 42 percent in net profit in 2008, the company said on Tuesday, standing at 44.4 billion yuan - in line with expectations. Oil and gas sales hit 100.83 billion yuan, the company said, up 38.1 percent on year. Net output was up 14 percent to 195.4 million barrels of oil equivalent, while average realized oil prices increased 34.9 percent.
Also, telecom operator China Unicom saw 2008 revenue ease 1.2 percent at 148.91 billion yuan, the company said on Tuesday, while profit dropped 68.6 percent at 6.34 billion yuan. The consolidated net profit was 33.91 billion yuan, including net profit from discontinued operations of 27.57 billion yuan, deferred upfront connection fees of 890 million yuan, and consolidated basic earnings per share of 1.43 yuan.
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