The China stock market has finished higher now in consecutive sessions, adding more than 50 points or 2.1 percent in the process. The Shanghai Composite Index broke through resistance at 2,400 points, and now analysts predict that the market extend its recent gains at the opening of trade on Thursday.
The global forecast for the Asian markets is optimistic thanks to better than expected economic news out of the United States. Also, corporate earnings from the U.S. auto sector were dismal, but still better than expected - also providing a bit of positive sentiment. The European and U.S. markets ended higher across the board, and the Asian stocks are tipped to modestly follow that lead.
The SCI finished sharply higher again on Wednesday, powered by gains among the commodities - while the financial also ended modestly higher.
For the day, the index jumped 34.81 points or 1.47 percent to close at 2,408.02 after trading between 2,380.98 and 2,422.62. The Shenzhen Index rose 174.06 points or 1.94 percent to finish at 9,156.01 for a combined turnover of 250.67 billion yuan. Gainers outnumbered losses by 675 to 183 in Shanghai and 599 to 140 in Shenzhen.
Among the gainers, China Shenhua Energy gained 5.8 percent, while China Coal jumped 5.65 percent, Industrial and Commercial Bank of China rose 0.76 percent, China Construction Bank gained 0.47 percent, Chongqing Iron and Steel Co. rose 1.24 percent, Yanzhou Coal Mining was up 6.2 percent, Jiangxi Copper rose 2.6 percent and Anhui Jiangcheng Copper jumped 5.1 percent.
The lead from Wall Street is upbeat as stocks showed a substantial turnaround over the course of the trading day on Wednesday, ending the day sharply higher after seeing some initial weakness. Investors shrugged off some negative news and turned their focus to better-than-expected reports on pending home sales, construction spending, and manufacturing activity.
The initial downward move came on the heels of the release of a report from ADP showing that non-farm private employment fell by a bigger than expected 742,000 jobs following a revised decrease of 706,000 jobs in February. Not long after the open, however, the National Association of Realtors said its index of pending home sales rose 2.1 percent to 82.1 in February from a reading of 80.4 in January. The increase by the index came as a surprise to economists, who had expected the reading to come in unchanged.
The Commerce Department also released its monthly report on construction spending for February, showing that spending fell 0.9 percent. Analysts had expected spending to fall 1.9 percent following a 3.5 percent decline in the previous month. Additionally, the ISM Manufacturing index edged up to 36.3 in March from 35.8 in February, although a reading below 50 still indicates a contraction in the sector. Economists had been expecting the index to come in at 36.0.
On the corporate front, the big three auto-makers continued to disappoint investors during Wednesday's session as all three posted massive declines in monthly sales. General Motors (GM) reported that total vehicle sales fell almost 45 percent in March to 156,380 units. Ford (F) also suffered a massive decline, with March sales plummeting about 41 percent year-over-year. Meanwhile, private auto giant Chrysler performed the best out of the big three, showing a decline in sales of less than 40 percent.
In other news, traders kept an eye on London throughout the session, waiting for news from the G20 summit of global leaders. The leaders will discuss efforts to deal with the weakness in the global economy. Thousands of protesters have taken to the London streets, expressing their anger over the state of the economy.
The major averages continued to perform well in late day trading, ending the session near their best levels of the day. The Dow closed up 152.68 points or 2 percent at 7,761.60, the Nasdaq closed up 23.01 points or 1.5 percent at 1,551.60 and the S&P 500 closed up 13.21 points or 1.7 percent at 811.08.
In economic news, China's Purchasing Managers' Index for the manufacturing sector dropped to 44.8 in March from 45.1 in February, the CLSA Asia-Pacific said Wednesday. A reading above 50 indicates an expansion, while a reading below 50 signifies a contraction - and the index came in below 50 for the eighth consecutive month. In March, the new orders index decreased, following three consecutive months of increase. At the same time, the manufacturing index showed a rise.
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