Bank stocks are in focus in the Korean stock market where trading got off to a firm start on Thursday on positive cues from Wall Street. Other markets across the Asia-Pacific region are also trading firm on hopes the health of the U.S. financial systems may not be as bad as was earlier feared.
The Korean benchmark index KOSPI, which rose to 1,416 in early trading, is currently up 11.10 points or 0.80% at 1,405. The index had closed with a modest loss of 4 points at 1,393 on Wednesday with participants choosing to take some profits after recent gains.
In the banking sector, Korea Exchange Bank is up 13%. Woori Finance and KB Financial are trading higher by 5% and 4.5%, respectively. Shinhan Financial Group is up by a modest 1.1%
Automobile stocks are trading mixed. Saangyong Motor is trading 10% up while Hyundai Motor and Kia Motors are down by 2.6% and 0.4% respectively.
Market heavyweight Samsung Electronics is trading marginally higher. Hynix Semiconductor is also up marginally. LG Display LCD and LG Electronics are trading weak with sharp losses.
Shipbuilders are trading mixed. Hyundai Heavy Industries and Samsung Heavy Industries are down by about 0.4% while Daewoo Shipbuilding is up nearly a percent. Bulk Carrier STX Pan Ocean is trading stronger by 4.5%.
Steel maker Hyundai Steel is down marginally while POSCO is trading 4% up. Among oil stocks, SK Holdings is up 1.7% and S-Oil is trading with a 3% gain. Energy stock KEPCO is up 1.3%.
Airlines are trading weak. Among telecom stocks, SK Telecom is up 1.2% while KT Corp. is down with a loss of 0.5%.
Other markets in the Asia-Pacific region are also trading firm at present. The Nikkei 225 benchmark of the Japanese market is up by over 400 points or 4.47% now. The Hang Seng is up 213.56 points. Australia, New Zealand, Indonesia and Singapore are also trading with strong gains. The New Zealand market is modestly higher.
The stock markets across the Asia-Pacific region had closed mostly higher on Wednesday, although the Japanese market remained closed for the third straight day. Hong Kong's Hang Seng Index jumped 2.5 percent.
The European markets also moved higher, benefiting from the U.S. employment data. The U.K.'s FTSE 100 Index rose 1.4 percent, while the French CAC 40 Index and the German DAX Index advanced 1.8 percent and 0.6 percent, respectively.
Wall Street had a pretty good session on Wednesday despite some profit taking during the course of the day. Market sentiment was fairly upbeat thanks to better-than-expected economic data. Market also reacted positively to reports suggesting that several of the financial companies examined by the government don't need additional capital.
According to the latest ADP Employment Report, 491,000 jobs were cut from private payrolls in April, but it turned out to be better than the 645,000 job cuts economists were expecting. And, the figure is substantially down from the 708,000 job losses recorded for March. While the data points to continued weakness in the labor market, it presents another sign that the economy is stabilizing and generated some optimism about the Labor Department's monthly employment report due to be released on Friday.
In an interview with RTT News, Peter Cardillo, chief market economist at Avalon Partners, said that the ADP employment data signals that the Labor Department's monthly employment report will probably show a decrease of less than 500,000 jobs.
According to media reports, the government stress tests of the nation's leading financial firms have determined that JP Morgan, Goldman Sachs, American Express and Bank of New York Mellon will not need additional capital. At the same time, reports have suggested that Bank of America, Citigroup and Wells Fargo will be asked to raise additional capital.
While the official results are not due to be released until after the close of trading on Thursday, the leaks generated some optimism about the outlook for the financial sector.
With the economy showing signs of a speedy recovery, investors are turning to stocks once again. Recent data shows that sequential inflow of funds into mutual fund assets on a percentage basis was the biggest in absolute terms in almost a year.
While the Nasdaq underperformed the Dow and the S&P 500 by a wide margin, the major averages all closed firmly positive. The Dow closed up 101.63 points or 1.2 percent at 8,512.28, the Nasdaq closed up 4.98 points or 0.3 percent at 1,759.10 and the S&P 500 closed up 15.73 points or 1.7 percent at 919.53.
Crude oil prices advanced 4.6% to settle at a five-month closing high of $56.34 per barrel.
While some traders are likely to stay on the sidelines Thursday ahead of the release of the results of the government's stress tests, trading could be impacted by the release of Labor Department reports on weekly jobless claims and first-quarter labor productivity and costs.
Traders will also be digesting the quarterly results from Cisco, News Corp. and Prudential after the close of trading Wednesday. Additionally, General Motors is due to release its quarterly results before the start of trading on Thursday.
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