RTTNews - The Hong Kong stock market has finished higher now in back-to-back sessions, collecting nearly 500 points or 3.5 percent along the way. The Hang Seng Index has regained the 17,000-point plateau, and now investors are looking forward to further upward mobility when the market kicks off trade on Tuesday.
The global forecast for the Asian markets is positive, thanks to better than expected economic data and corporate news out of the United States. A rise in the price of oil has given commodities a boost, which helped to push the European and U.S. markets firmly into positive territory, and the Asian markets are predicted to do the same.
The Hang Seng finished sharply higher on Monday, rebounding from a 1.3 percent decline in morning trade on bargain hunting in the afternoon. Property shares finished higher, as did financials and mainland China stocks.
For the day, the index was up 232.21 points or 1.4 percent to close at 17,022.91 after trading between 16,334.36 and 17,062.49 on turnover of 66.4 billion Hong Kong dollars.
Among the gainers, China Construction Bank was up 2.9 percent, while Hong Kong Exchanges & Clearing added 5.8 percent, Cheung Kong Holdings rose 2 percent, Wharf Holdings gained 6.2 percent, New World Development was up 6.9 percent, Hong Kong & China Gas rose 4.2 percent and China Cosco added 8.9 percent.
The lead from Wall Street is broadly optimistic as stocks rallied on Monday after a notably lower close in the previous session, bolstered by hopes about the housing market. The major averages all closed at their best levels of the day.
Traders considered a report from the National Association of Home Builders that said its index of homebuilder sentiment rose to 16 in May, compared to a level of 14 in April. The figure was the best reading since September, fueling speculation that the housing sector is bottoming and economic recovery may be around the corner. Further, the report indicated that attitudes of home builders improved for both the present situation and for the next several months.
Housing and housing related stocks rallied on the data, being bolstered further by better-than-expected earnings from home improvement retailer Lowe's (LOW). The company announced first-quarter net income of $0.32 per share, beating out Wall Street analyst estimates of $0.25 per share. Shares advanced on the heels of the earnings report, climbing away from a six-week low set on Friday.
Traders will also consider earnings from Home Depot, Inc. (HD), scheduled to release financial results for the first quarter on Tuesday. Analysts project the number one U.S. home improvement retailer will report earnings of $0.29 per share, sharply lower than last year's $0.41 per share, with 11.4 percent anticipated decline in sales.
Wall Street now turns its attention to the Commerce Department data on housing starts for April. The headline housing starts figure is expected to climb to 527,000 from March's figure of 510,000. The report is also expected to show building permits at 530,000 for April up from previous month's level of 516,000. Although the figures are expected to rise, economists are still uncertain that a trough has been reached. According to Wachovia Securities, housing starts may hover around the half-million mark for one more month before beginning to slowly climb in the second half of the year.
In other economic news, Treasury Secretary Timothy Geithner commented that although the economy is stabilizing, there are still some difficulties ahead. In an early afternoon interview, Geithner stated that Even as growth starts to turn positive, which will happen...it's not going to feel better for a long time for millions of Americans.
The Federal Reserve continued its treasury buyback program this morning, part of its quantitative easing efforts. The New York arm of the Federal Reserve purchased $3.18 billion worth of securities with maturity dates ranging from August of 2019 to February of 2026. The day's buyback attracted strong interest, with a total of $15.22 billion in treasuries submitted for the purchase. With the purchase, the government has bought back $107.87 billion in treasuries since the purchase program began on March 25th.
The major indices closed prominently higher, with the Dow closing up 235.44 points or 2.85 percent to close at 8504.08, the NASDAQ finishing up 52.22 points or 3.11 percent to end at 1732.36, and the S&P 500 closing higher by 26.83 points or 3.04 percent to close at 909.71.
In economic news, Hong Kong will on Tuesday afternoon announce the seasonally adjusted unemployment rate for April, with analysts expecting the rate to jump to 5.4 percent from the current 5.2 percent.
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