The South Korean stock market on Tuesday halted the two-day losing streak that saw it shed more than 40 points or 3.5 percent in the process. The KOSPI regained the 1,200-point plateau that it had surrendered a day earlier, and now analysts are forecasting further gains 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 KOSPI finished modestly higher on Tuesday, as gains among the automobile stocks and the construction issues nudged the market into positive territory. For the day, the index added 8.80 points or 0.73 percent to close at 1,206.26 after trading between 1,203.16 and 1,228.21.
Among the gainers, Hyundai Motor was up 4.72 percent, while Kia Motors was 5.96 percent higher, Hyundai Engineering & Construction rose 4.1 percent, GS Engineering & Construction climbed 4.4 percent, Shinhan Financial gained 1.23 percent, Daewoo Ship building gained 0.99 percent and Samsung Heavy Industries rose 3.13 percent. Finishing lower, KB Financial Group lost 2.51 percent and Hyundai Heavy Industries declined 1.26 percent.
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 economic news, South Korea will on Wednesday announce March numbers for inflation, imports, exports and trade balance. Inflation is expected to climb 3.9 percent on year, down from 4.1 percent in February. Imports are expected to decline 33.7 percent on year, while exports are called lower by 21.5 percent. The trade balance is expected to reflect a surplus of $4.8 billion.
Also, South Korea's National Statistical Office said on Tuesday that the industrial production declined 10.3 percent year-over-year in February, compared with a revised 25.5 percent fall in the previous month. Economists were looking a decline of 16.6 percent.
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