RTTNews - The Hong Kong stock market has finished lower in back-to-back sessions, ahead of Wednesday's market holiday for SAR Establishment Day. The Hang Seng has lost more than 220 points or 1.3 percent in that time, and the market has dipped below support at 18,400 points - although analysts expect the market to recover that level at the opening of trade on Thursday.
The global forecast for the Asian markets is cautiously optimistic, thanks to better than expected economic data and sound corporate news. Strength among the commodities and oil companies are expected to push the regional bourses higher - especially after the European markets finished sharply higher and the U.S. bourses also ended with modest gains.
The Hang Seng finished modestly lower on Tuesday, dragged lower by weakness among the property stocks, while the oil stocks and financials finished in mixed fashion.
For the day, the index shed 149.78 points or 0.81 percent to close at 18,378.73 after trading between 18,364.81 and 18,883.24 on turnover of 65.13 billion Hong Kong dollars.
Among the actives, HSBC Holdings was up 0.61 percent, while CNOOC fell 0.72 percent, China Oilfield Service shed 2.66 percent, Sinopec Shanghai Petrochemical added 0.76 percent, Sinopec gained 3.32 percent, PetroChina eased 0.35 percent, Cheung Kong lost 3.52 percent, Hutchison Whampoa fell 2.31 percent and Henderson Land Development shed 1 percent.
The lead from Wall Street is positive, although stocks were unable to hold onto their strong gains, steadily ceding ground over the course of Wednesday's session after moving sharply higher in morning trading. Nonetheless, the major averages all finished in positive territory amid yet another low volume session.
Early gains came on the heels of a report from the Institute for Supply Management, which said its index of activity in the manufacturing rose to 44.8 in June from 42.8 in May, although a reading below 50 indicates a contraction in the sector. The index came roughly in line with the expectations of economists, who forecast a reading of 44.6.
Separately, housing industry group NAR said its pending home sales index rose 0.1 percent to 90.7 in May from an upwardly revised reading of 90.6 in April. Economists had been expecting the index to come in unchanged compared to the 90.3 originally reported for the previous month.
The day's optimism was mitigated by data from the U.S. Commerce Department revealing that construction spending fell 0.9 percent in May following a revised 0.6 percent increase in the previous month. Economists had expected construction spending to fall by 0.6 percent compared to the 0.8 percent increase that was originally reported for April.
Meanwhile, ADP said that non-farm private employment fell by 473,000 jobs in June following a revised decrease of 485,000 jobs in May. Economists had expected a decrease of 394,000 jobs compared to the loss of 532,000 jobs originally reported for the previous month. While employment fell by more than expected, the decrease in jobs marked the smallest drop since October of 2008, when employment fell by 352,000 jobs.
On the earnings front, General Mills (GIS) reported adjusted fourth-quarter net income of $0.86, up 18 percent from $0.73 in the same period last year. Analysts expected the firm to report earnings of $0.80 per share. Shares of the consumer foods manufacturer climbed by 3.9 percent on the session as traders reacted to the better-than-expected earnings.
The major averages continued to give back ground going into the close but were able to finish in the green by comfortable margins. The Dow closed up by 57.06 points or 0.7 percent at 8,504.06, the NASDAQ rose by 10.68 points or 0.6 percent to 1,845.72 and the S&P 500 advanced by 4.01 points or 0.4 percent to 923.33.
In economic news, Hong Kong is scheduled to release May numbers for retail sales on Thursday. By value, sales are forecast to fall 8.8 percent on year after the 4.4 percent decline in April. By volume, sales are expected lower by an annual 8.7 percent after dipping 5.5 percent in the previous month.
Also, China's Purchasing Managers' Index for the manufacturing sector stayed above the threshold limit for the fourth consecutive month, pointing towards a gradual expansion in the sector, driven by stimulus measures, survey data revealed on Wednesday.
The manufacturing PMI rose to 53.2 in June from 53.1 in the prior month, reports said citing the China Federation of Logistics and Purchasing. A reading above 50 indicates an expansion in the manufacturing sector, while a level below 50 signals contraction. Among the sub-indices, output and export orders improved in June. The export orders index climbed to 51.4 in June from 50.1 in May, while the measure for new orders dropped to 55.5 from 56.2 in May.
Finally, the CLSA Asia-Pacific Markets PMI also rose to 51.8 in June from 51.2 last month. The June reading was the highest since July 2008. During January to May, the Chinese total investment in fixed assets increased 32.9 percent to 5.35 trillion yuan. At the end of May, outstanding renminbi loans reached 36.21 trillion yuan, up 30.6 percent from the previous year.
In corporate news, General Motors China reported that it and its joint ventures sold 814,442 vehicles in China in the first half of 2009, up 38.0 percent from the first six months of 2008. For the first six months as a whole, GM China's SAIC-GM-Wuling joint venture sales totaled 524,598 units, up 49.9 percent from the first half of 2008.
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