RTTNews - The China stock market has finished higher now in two straight sessions, jumping more than 160 points or 4.2 percent and making back most of what it lost in Wednesday's 5 percent plunge. The Shanghai Composite Index closed above support at 3,410 points, and now investors are anticipating further, more modest gains at the opening of trade on Monday thanks to continued solid economic data.
The global forecast for the Asian markets offers little in the way of guidance as commodities and financials are tipped to continue to rise, but weakness among the technology shares could erase those gains. The European and U.S. markets finished in mixed fashion, although not too far from the unchanged line in either direction - and the Asian bourses are tipped to follow that lead.
The SCI finished sharply higher on Friday, fueled by strong gains among the resource stocks and the energy producers.
For the day, the index surged 90.50 points or 2.72 percent to close at 3,412.06 after trading between 3,333.72 and 3,414.15. The Shenzhen Component Index gained 398.19 points or 3.00 percent to finish at 13,670.72 for a combined turnover of 336.7 billion yuan. Gainers in Shanghai outnumbered losers by 844 to 28 and by 733 to 21 in Shenzhen.
Among the gainers, Huadian Power International Corporation, Yunnan Copper and Jiangxi Copper all rose by the daily limit of 10 percent, while Datang International Power Generation Co. climbed 9.98 percent.
The lead from Wall Street is inconclusive as stocks finished Friday's session on a mixed note after a shaky start prompted by gross domestic product figures for the second quarter. The major averages closed on opposite sides of the unchanged mark amid another session that was marred by low volume, typical of the summer.
Early trading was swayed by an advance report on second quarter gross domestic product from the Commerce Department. While the report revealed that the U.S. economy continued to shrink by a slower than expected margin, trader concern grew as consumer consumption came in far lower than expected. According to the data, gross domestic product fell at a pace of 1 percent for the second quarter after economists had expected GDP to fall at a rate of 1.5 percent. Some pessimism was generated by the personal consumption figure in the report, which showed a decrease of 1.2 percent, significantly more than economists had been expecting. This followed a 0.6 percent increase in the first quarter.
Later in the morning, traders largely shrugged off the Institute of Supply Management-Chicago's manufacturing index for July, which came in slightly higher than expected at 43.4. Economists expected the business barometer index to come in at 43 after rising by 5 points to 39.9 in June.
With earnings season drawing to a close, Disney (DIS) and Monster Worldwide (MWW) reported earnings that beat forecasts, while oil giant Chevron (CVX) disappointed. The season's earnings results largely beat expectations, but for the most part due to cost cutting measures rather than revenue growth in a market constricted by the recession.
After hovering in positive territory throughout much of the trading session, the major averages ended the day on opposite sides of the unchanged line. The tech heavy NASDAQ fell by 5.80 points or 0.3 percent to 1,978.50, while the Dow closed up by 17.15 points or 0.2 percent at 9,171.61 and the S&P 500 rose 0.73 points or 0.1 percent to 987.48. Despite the mixed performance for the session, the major averages all closed higher for the week due largely to Thursday's rally. The Dow rose 0.9 percent for the week, while the NASDAQ and the S&P 500 posted weekly gains of 0.6 percent and 0.8 percent, respectively.
In economic news, the China Federation of Logistics and Purchasing said on Saturday that the Purchasing Managers' Index for China's manufacturing sector for July at 53.3 percent, up 0.1 percentage point from June. A 50 and above reading indicates expansion, while one below 50 suggests contraction. In June, the index gained 0.1 percentage point from May.
The Purchasing Price Index for July improved 2.1 percentage points to 59.9 percent, a monthly increase since December. The output index was 57.3 percent, an increase of 0.2 percentage point from last month. The new order index for July was 55.5 percent in July, same as that in the previous month.
PMI includes indices that measure economic performance. In China, the survey is conducted by the National Bureau of Statistics, covering purchasing and supply managers of over 700 firms. For the second quarter this year, the Chinese economy grew 7.9 percent, up from 6.1 percent in the first quarter and 6.8 percent in the fourth quarter last year.
Also, China said on Saturday that its first-half 2009 crude steel production was 266.58 million tons, an increase of 1.23 percent from the year ago period. For the full year, China now anticipates crude steel production to be in excess of 500 million tons, according to vice chairman of China Iron and Steel Association, Luo Bingsheng.
Daily output of crude steel for June was about 1.65 million tons on average. Despite higher production capacity, Chinese steel companies experienced declining profits and revenues in the first six months, mainly on low steel prices as a result of weak market demands. Statistics of 71 major steel producers show profit declined 98.3 percent to 1.73 billion yuan from last year, while total revenues dropped 29.07 percent to 955 billion yuan or US$ 139.82 billion.
China produced 500 million tons of crude steel last year, about 38 percent of the world total production volume.
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