RTTNews - The Hong Kong stock market was down by less than a point, but that was enough to snap the five-day winning streak in which the market had gained more than 2,200 points or 13 percent on its way to a 10-month closing high. The Hang Seng Index remained above the 19,500-point level, and now analysts predict that the market will recover modestly at the opening of trade on Wednesday.
The global forecast for the Asian markets remains positive, although many of the regional bourses are riding lengthy winning streaks and may see some more of the profit taking that crept into trade towards the end of the previous session. Biotechnology, chemical and pharmaceutical stocks are tipped higher, while the financials could ease under pressure. The European and U.S. markets finished higher again, and the Asian markets are expected to follow suit.
The Hang Seng finished virtually flat on Tuesday, as gains among the financial sector were erased by profit taking - particularly among the telecoms.
For the day, the index fell 0.64 points to close at 19,501.73 after trading between 19,295.23 and 19,601.86 on turnover of 80.08 billion Hong Kong dollars. Among the actives, China Mobile fell 2.5 percent and HSBC rose 1.9 percent.
The lead from Wall Street is cautiously optimistic once again as a spike in buying interest in the afternoon helped stocks to finish modestly higher on Tuesday after showing a lack of direction for much of the day. The major averages all finished in positive territory by solid margins, building on their recent gains.
Stocks started strong following a slew of largely promising earnings, with five Dow components reporting their quarterly results. Despite beating Wall Street estimates, Caterpillar (CAT), Coca-Cola (KO), DuPont (DD), Merck (MRK) and United Technologies (UTX) saw mixed reaction.
In other news, Federal Reserve Chairman Ben Bernanke testified before the House Financial Services Committee today, stating that the U.S. economy is showing signs of stabilization and that the stimulus authorities pumped into the global economy late last year probably helped to avoid a collapse of the financial system.
Bernanke also said that the Fed is prepared to remove its stimulus when the time is appropriate in order to avoid a spike in inflation. However, he reiterated that the economy is still in a fragile state, with unemployment high and consumer spending shaky.
The Fed chief is scheduled to delivery his second day of testimony before the Senate Banking Committee at 10 a.m. ET Wednesday morning.
Meanwhile, President Barack Obama continued to push for the passage of his healthcare plan this afternoon, looking to gather additional support for the much-discussed bill that aims to provide universal healthcare.
The major averages moved to the upside heading into the close, finishing near their best levels of the day. The Dow advanced 67.79 points or 0.8 percent to 8,915.94, the NASDAQ climbed 6.91 points or 0.4 percent to 1,916.20 and the S&P 500 rose 3.45 points or 0.4 percent to 954.58.
In economic news, the Census and Statistics Department said on Tuesday that Hong Kong's composite consumer price index dropped 0.9 percent in June from the previous year. Economists were looking for a decline of 0.5 percent. This annual rates of change were affected by various one-off relief measures taken by the Government, especially the implementation of electricity charge subsidy.
Netting out the effects of all Government's one-off relief measures, the composite CPI registered an annual increase of 0.4 percent in June, smaller than May's 1.3 percent, mainly due to the moderation in increases in food prices and private housing rentals.
For the first half of 2009, the composite index rose 0.8 percent, while netting out the effects of government's relief measures, prices moved up 2.1 percent. At the same time, overall prices dropped 0.1 percent in the second quarter on a yearly basis.
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