The Hong Kong stock market on Thursday wrote a finish to the three-day winning streak that saw it add nearly 1,200 points or 9 percent. The Hang Seng Index slid below support at 15,600 points, but now investors are optimistic that the market will resume its upward march at the opening of trade on Friday.
The global forecast for the Asian markets is positive, thanks to better than expected earnings news on the corporate front - which may provide the technology and financial sectors with a lift. The United States also reported some economic news that beat expectations, sending Wall Street significantly higher. The European bourses also ended with sharp gains, and the Asian markets are expected to track higher as well.
The Hang Seng finished modestly lower on Thursday, falling on profit taking after a strong opening. Weak economic data from mainland China added to the negative sentiment.
For the day, the index dropped 86.63 points or 0.55 percent to close at 15,582.99 after trading between 15,517.39 and 15,977.13 on turnover of 74.63 billion Hong Kong dollars.
Among the decliners, China Resources lost 1.91 percent, while China Overseas fell 1.34 percent, China Mercantile Holdings declined 4.42 percent, China Shenhua shed 4.36 percent, Aluminum Corporation of China (Chalco) slipped 0.91 percent, CNOOC lost 3.20 percent, PetroChina fell 2.29 percent, Hang Seng Bank slipped 0.17 percent, Bank of Communications fell 2.02 percent, Bank of China lost 2.05 percent, BOC Hongkong declined 1.48 percent, Ping An fell 3.50 percent, China Life edged down 0.36 percent and China Eastern Airlines fell 5.6 percent.
Finishing higher, HSBC Holdings was up 0.45 percent and China Mobile rose 1.4 percent.
The lead from Wall Street is broadly optimistic as stocks moved sharply higher over the course of the trading session on Thursday, with the major averages all closing firmly in positive territory after seeing some earlier uncertainty. As was the case in the previous session, a late day rally contributed to the higher close.
In corporate news, financial services giant JP Morgan (JPM) released its first quarter financial results before the start of trading, reporting earnings that fell year-over-year but came in above analyst estimates. JP Morgan reported first-quarter net income of $0.40 per share compared to $0.67 per share in the year ago quarter. Analysts had expected the company to report earnings of $0.32 per share. Revenues also came in better than expected.
Additionally, mobile phone giant Nokia (NOK) generated some buying interest after the company reported first quarter earnings that fell sharply year-over-year but said it expects second quarter worldwide mobile device volume to be flat or show modest sequential growth.
On the economic front, a Commerce Department report showed that housing starts fell 10.8 percent to an annual rate of 510,000 in March from the revised February estimate of 572,000. Economists had expected starts to slip to 540,000 from the 583,000 originally reported for the previous month.
Meanwhile, the Labor Department said initial jobless claims fell to 610,000 from the previous week's revised figure of 663,000. Economists had expected jobless claims to edge up 658,000 from the 654,000 originally reported for the previous week. However, continuing claims rose to a new record high.
Separately, the Philadelphia Federal Reserve said its index of regional manufacturing activity rose to a negative 24.4 in April from a negative 35.0 in March. While a negative reading indicates a contraction in the sector, the index increased by much more than expected.
The major averages moved off their best levels of the day going into the close but still ended the day sharply higher. The Dow closed up 95.81 points or 1.2 percent at 8,125.43, the NASDAQ closed up 43.64 points or 2.7 percent at 1,670.44 and the S&P 500 closed up 13.24 points or 1.6 percent at 865.30. With the gains, the Dow and the S&P 500 ended the session at their best closing levels in over two months, while the tech-heavy NASDAQ finished the day at its best closing level since early November of 2008.
In economic news, China's gross domestic product expanded 6.1 percent in the first quarter of 2009, the National Bureau of Statistics said on Thursday - slightly higher than expectations for a 6.0 increase following the 6.8 percent gain in the previous quarter. It also marks the slowest rate of increase since the quarterly data was first collected in 1992. It also casts some doubt over the government's full-year GDP target of 8 percent growth following the 9 percent expansion in 2008 and the 13 percent gain in 2007.
The NBS also said that consumer prices in China eased 1.2 percent on year in March. Forecasts had called for a 1.4 percent decline after the 1.6 percent annual fall in February. On month, inflation was down 0.3 percent - mostly due to weak domestic demand and falling commodity prices. For the first quarter of 2009, inflation was down 0.6 percent on year following a 5.9 percent increase for all of 2008. Also, producer prices fell an annual 4.6 percent in the first quarter.
Industrial production in China was up 5.1 percent on year through the first three months of 2009, following a 12.9 percent jump in all of 2008. In March, industrial production added 8.3 percent, the data showed. Analysts had expected a 6.3 percent annual increase following the 11 percent jump in February.
Also, the NBS said that urban fixed asset investment was up 28.6 percent on year in the first quarter and 30.3 percent in March. Retail sales were up 15 percent in the first quarter and 14.7 percent in March.
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