RTTNews - The Hong Kong stock market has ended lower in two of the last three sessions since ending the modest two-day winning streak in which it had collected more than 450 points or 1.8 percent. The Hang Seng Index slid below the 20,000-point support plateau, although analysts are tipping a modest recovery at the opening of trade on Thursday - particularly if the China market also opens to the upside.
The global forecast for the Asian markets is cautiously optimistic, with bourses likely to rebound modestly after sharp declines throughout much of the region in the previous session. The markets are likely to see strength in the oil and commodity stocks, as well as the pharmaceutical shares - while those gains may be offset by selling in the airline and property sectors. The European markets finished close to the unchanged line on either side, while the U.S. markets ended modestly higher - and the Asian bourses are forecast also to open slightly to the upside.
The Hang Seng finished sharply lower on Wednesday, dragged lower by a 4 percent fall in Shanghai in the afternoon after a strong opening. Mainland stocks fell under heavy pressure, as did the financials, properties and utilities.
For the day, the index dropped 352.04 or 1.73 percent to close at 19,954.23 after trading between 19,824.86 and 20,352.94 on turnover of 64.41 billion Hong Kong dollars.
Among the decliners, HSBC Holdings dropped 1.54 percent, while Hang Seng Bank declined 1.32 percent, ICBC was down 0.94 percent, China Construction Bank fell 1.85 percent, Bank of China shed 2.13 percent, Bank of Communications lost 1.2 percent, China Life eased 0.93 percent, Ping An Insurance lost 1.46 percent, Cheung Kong shed 2.69 percent, Sun Hung Kai Properties fell 2.05 percent, Cathay Pacific was off 3.57 percent, China Mobile lost 1.48 percent and HKEx eased 1.18 percent.
The lead from Wall Street is modestly positive as stocks were able to recover from early weakness and finished notably higher on Wednesday, largely driven by a report indicating a jump in oil demand. The major averages all closed in positive territory by solid margins, further offsetting Monday's losses.
With no significant news on the economic front, the day's crude oil inventories report received extra attention. Inventories unexpectedly fell in the week ended August 14, according to data released this morning by the Energy Information Administration.
Oil prices surged above $70 a barrel after the report was made public, resulting in significant strength among oil-related stocks, which largely spearheaded today's rally. Crude for September delivery eventually closed up $3.23 at $72.42 a barrel.
The EIA said crude oil inventories decreased by 8.4 million barrels, while analysts expected to see an increase of about 1.1 million barrels for the week. At 343.6 million barrels, however, crude oil inventories remain above the upper boundary of the average range for this time of year.
Earlier, traders reacted to the latest set of corporate quarterly results, with Hewlett-Packard (HPQ) reporting third quarter earnings of $0.91 per share after the closing bell Tuesday, beating the consensus estimate of $0.90 per share. The company expects to report fourth quarter earnings of $1.12 per share compared to the forecast of $1.07 per share.
Deere & Co. (DE) reported third-quarter net income of $0.99 per share, compared with $1.32 per share in the same period last year. The results topped Wall Street estimates of $0.57 per share. Looking forward, Deere said it expects full year net income of $1.1 billion despite expectations for the largest single-year sales decline in at least 50 years.
BJ's Wholesale Club (BJ) reported second quarter net income of $0.64 per share, compared to $0.61 per share in the prior year quarter. Analysts had expected the firm to earn $0.62 per share.
In other news, Ellen Hughes-Cromwick, chief economist of Ford Motor Co. (F), was quoted as saying that economic indicators in the U.S are showing that a recovery is already underway and that auto sales seem to be stabilizing. Hughes-Cromwick also predicted that Ford would see an improvement in sales in 2010.
The major averages saw choppy movement in late-session dealing, finishing near their best levels of the day. The Dow closed up by 61.22 points or 0.7 percent at 9,279.16, the NASDAQ climbed by 13.32 points or 0.7 percent to 1,969.24 and the S&P 500 rose by 6.79 points or 0.7 percent to 996.46.
In economic news, Hong Kong will on Thursday release July numbers for its consumer price index. Forecasts call for a decline of 1.5 percent on year following the 0.9 percent annual easing in June.
In corporate news, Bank of Communications on Wednesday reported flat first-half earnings, posting a net profit of 15.56 billion yuan in the first six months of the year. That compared with 15.5 billion yuan a year earlier and beat analyst expectations for a profit of 15.3 billion yuan. Lending volume was up by 30.15 percent to 1.73 trillion yuan, while the company reported a second-quarter profit of 7.6 billion yuan.
Also, China-based vaccine developer Sinovac Biotech reported a 74 percent increase in second-quarter profit, as sales grew 21 percent driven partly by increased sales of inactivated hepatitis A vaccine following a purchase order from China's Ministry of Public Health Ministry. For the latest quarter, net income attributable to the stockholders of Sinovac Biotech soared to $5.81 million or $0.14 per share from $3.34 million or $0.08 per share in the prior-year period. Quarterly sales moved up 21 percent to $20.02 million from $16.52 million in the previous year.
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