RTTNews - The Hong Kong stock market headed right back into positive territory, just one day after it saw an emphatic finish to the modest two-day winning streak in which it had collected more than 450 points or 1.8 percent in the process. The Hang Seng Index closed above the 20,300-point support plateau, and now analysts suggest that the market could continue to trend higher when it opens for business on Wednesday.
The global forecast for the Asian markets is fairly optimistic as stocks around the world began to recover from steep losses in recent sessions. Technology stocks are expected to be in favor, as are the steel and financial shares. The European and U.S. markets finished firmly in positive territory, and the Asian bourses are tipped to follow suit.
The Hang Seng finished modestly higher on Tuesday, thanks to major gains among the financials and the gold stocks
For the day, the index put on 168.62 points or 0.84 percent to finish at 20,306.27 after trading between 19,916.28 and 20,409.19 on turnover of 71.49 billion Hong Kong dollars.
Among the actives, Denway Motors shed 1.35 percent, while Great Wall Motor surged 9.08 percent, Dongfeng Motor Group added 2.33 percent, Sinotruk eased 0.79 percent, China Motor Bus was up 0.83 percent, Li & Fung added 6.4 percent, HSBC Holdings gained 1.89 percent, Zijin Mining Group added 0.77 percent, Zhaojin Mining Industry was up 2.15 percent, Lingbao Gold collected 2.23 percent and Sino Gold Mining gathered 1.27 percent.
The lead from Wall Street is solidly positive as stocks saw notable strength on Tuesday, partly offsetting the steep losses posted in the previous session amid some encouraging earnings reports. The major averages all finished in positive territory by solid margins, but they remain well off their recent highs.
Buying interest was boosted early on by a set of positive earning reports, with Home Depot (HD), Saks (SKS) and Target (TGT) all exceeding Wall Street estimates on the bottom line, although their revenues fell short of estimates.
Optimism won out despite the release of a report from the Commerce Department showing an unexpected decrease in housing starts in the month of July. The report said that housing starts fell 1.0 percent to an annual rate of 581,000 in July from the revised June estimate of 587,000. Economists had expected starts to rise to 598,000 from the 582,000 originally reported for the previous month.
Separately, the Labor Department revealed that producer prices dropped 0.9 percent in July following a 1.8 percent increase in the previous month. Economists had expected the measure to slip 0.3 percent for the month. Core prices, which exclude the volatile food and energy sectors, ticked down 0.1 percent in July. Economists were looking for core prices to edge up by 0.1 percent.
While the major averages pulled back off their highs for the session going into the close, they remained firmly in positive territory. The Dow closed up by 82.07 points or 0.9 percent at 9,217.41, the Nasdaq advanced by 25.08 points or 1.3 percent to 1,955.92 and the S&P 500 rose by 9.94 points or 1 percent to 989.67.
In economic news, the Hong Kong unemployment rate remained unchanged near its four-year high in the three months ending July from the previous three-month period ending June, the Census and Statistics Department said on Tuesday. The seasonally adjusted jobless rate stood at 5.4 percent in the May to July period, unchanged from the April to June period. Economists had expected the rate to edge up to 5.5 percent.
The number of unemployed persons, on a not seasonally adjusted basis, totaled 213,800 in the May to July period, larger than the 203,000 recorded in the April to June period. Meanwhile, the underemployment rate increased to 2.4 percent from 2.3 percent in the previous three months period. The number of underemployed persons increased to 88,600 from 84,900.
In corporate news, food products company China Organic Agriculture turned to a profit in the second quarter, the company said on Tuesday, as sales surged over 800 percent. The company's flagship products include organic and green rice. Other products include soybeans, kidney beans and mushrooms. Net income for the quarter was $2.48 million, or $0.03 per share, a reversal from year-ago loss of $0.12 million or breakeven earnings per share. Revenues surged 818 percent to $30.02 million from $3.27 million last year.
Also, Augyva Mining Resources Inc. on Tuesday announced the establishment of a 100 percent owned Hong Kong subsidiary, Duncan Lake Iron Limited, to facilitate dialogues between Augyva and major steel mills and other potential interested parties in China about its major iron property in James Bay, Quebec, the Duncan Iron Project. The company said the establishment of a presence in Hong Kong demonstrates its strong interest and commitment to the Chinese market.
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