One day after snapping the three-day winning streak that saw it add nearly 1,200 points or 9 percent, the Hong Kong stock market turned right back to the upside on Friday. The Hang Seng Index barely regained the 15,600-point plateau, and now investors are predicting that the market will add modestly to those totals at the opening of trade on Monday.
The global forecast for the Asian markets is virtually flat. Corporate earnings are a mixed bag so far as some have come in better than expected - although more of the big financials are due to report this week and could fall under pressure. The European markets finished sharply higher and the U.S. markets ended barely in the green, and the Asian bourses are predicted to fall somewhere in between with modest gains.
The Hang Seng finished slightly higher on Friday, after sharper gains in the morning were wiped out by profit taking. Strength among the property stocks nudged the market into positive territory, although most of the gains were erased by losses in the financial sector.
For the day, the index added 18.28 points or 0.12 percent to close at 15,601.27 after trading between 15,541.31 and 15,956.46 on turnover of 75.30 billion Hong Kong dollars.
Among the gainers, Cheung Kong rose 0.9 percent, while Hang Lung Properties rose 1.7 percent, HKEx rose 0.5 percent, Sino Land surged up 9.75 percent, New World Development advanced 5.85 percent, Wharf Holdings gained 5.76 percent, Tencent gained 2.33 percent, China Unicom added 0.95 percent, China Resources gained 1.80 percent, China Mercantile Holdings advanced 1.18 percent and CNOOC gained 4.78 percent.
Finishing lower, China Construction Bank was off 0.8 percent, while Cathay Pacific fell 3.4 percent, Hutchison Whampoa lost 2.28 percent, China Mobile slipped 0.20 percent, HSBC Holdings slipped 0.18 percent, Bank of East Asia declined 1.56 percent, Bank of China lost 1.75 percent, Bank of Communications fell 1.43 percent, BOC Hong Kong dropped 1.13 percent, China Shenhua lost 5.47 percent, China Overseas declined 1.36 percent, Aluminum Corporation of China (Chalco) fell 4.45 percent and PetroChina lost 1.46 percent.
Wall Street offers little in the way of guidance with perhaps a touch of upside as stocks ended Friday's trading modestly higher after a relatively lackluster session with traders digesting the latest batch of earnings news. The major averages ended the day just above the unchanged line but still managed close higher for the sixth consecutive week.
Earlier in the day, General Electric (GE) released its first quarter financial results, reporting earnings from continuing operations of $0.26 per share, down from $0.43 per share in the previous year. On average, analysts expected the company to report earnings of $0.21 per share.
Citigroup (C) also released its first quarter results, reporting a loss available to common shareholders that shrank significantly to $0.18 per share from $1.03 per share in the year ago quarter. Analysts expected the company to report a loss of $0.34 per share.
In other corporate news, General Motors (GM) CEO Fritz Henderson said it was more probable that the auto giant would need to seek bankruptcy protection in order to complete its restructuring process, although he noted that isn't the company's preferred option.
Meanwhile, on the economic front, the Reuters/University of Michigan's consumer sentiment index for April rose to 61.9, a substantial increase from the previous reading. Analysts had expected the index to rise to 58.5 from 57.3 in March.
Also, Federal Reserve Chairman Ben Bernanke delivered a speech earlier in the day in which he offered his support to financial innovation, despite the fact that some of these new products have contributed to the current economic crisis. Bernanke argued that increased regulation would be a better response than eliminating innovation. The Fed chief noted that while financial innovation can misfire, more often the benefits outweigh the downside.
The major averages moved to the downside going into the close, ending the day modestly higher. The Dow closed up 5.90 points or 0.1 percent at 8,131.33, the NASDAQ closed up 2.63 points or 0.2 percent at 1,673.07 and the S&P 500 closed up 4.30 points or 0.5 percent at 869.60. Friday's modest gains helped the major averages to post their sixth straight week of gains. While the Dow rose 0.6 percent for the week, the NASDAQ and the S&P 500 posted weekly gains of 1.2 percent and 1.5 percent, respectively.
In economic news, Hong Kong will on Monday announce seasonally adjusted unemployment figures for March. Analysts are expecting the rate to climb to 5.3 percent from 5.0 percent in February.
Also, the Official Receiver's Office said on Friday that bankruptcy petitions in Hong Kong reached the highest level since July 2003, after the economy slipped into a deep recession. There were 1,872 bankruptcy petitions in March, compared to 1,500 in February.
The Hong Kong economy had entered recession in the third quarter of 2008. Gross domestic product declined 2 percent sequentially in the final three months of 2008, following a 0.7 percent contraction in the third quarter and 0.9 percent decline in the second quarter.
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