The South Korean stock market has ended higher now in back-to-back sessions, gathering more than 35 points or 3 percent along the way. The KOSPI broke through support at 1,225 points, and now investors are cautiously optimistic that the market can add to those totals at the opening of trade on Thursday.
The global forecast for the Asian markets is optimistic thanks to better than expected economic news out of the United States. Also, corporate earnings from the U.S. auto sector were dismal, but still better than expected - also providing a bit of positive sentiment. The European and U.S. markets ended higher across the board, and the Asian stocks are tipped to modestly follow that lead.
The KOSPI finished sharply higher on Wednesday, thanks to sizeable gains among the financial stocks and the automobile producers.
For the day, the index jumped 27.10 points or 2.2 percent to close at 1,233.36 after trading between 1,201.71 and 1,238.04. Volume was 578.9 million shares worth 6.3 trillion won, with gainers beating decliners 640 to 195.
Among the actives, Shinhan Financial Group rose 4.67 percent, while Mirae Asset Securities jumped 9.7 percent, Woori Investment & Securities climbed 6.5 percent, Hyundai Motor rose 4.68 percent, Kia Motors climbed 4.92 percent, Hyundai Mobis advanced 4.9 percent, Ssangyong Motor rose 4.17 percent, KB Financial Group gained 4.55 percent, Hyundai Heavy Industries moved up 2.81 percent, Samsung Heavy Industries advanced 2.54 percent, Daewoo Shipping lost 0.70 percent, SK Holdings advanced 4.19 percent, S-Oil rose 3.02 percent, Samsung Electronics edged up 0.35 percent, LG Electronics advanced 3.94 percent, LG Display gained 2.50 percent and Hynix Semiconductor shed 0.81 percent.
The lead from Wall Street is upbeat as stocks showed a substantial turnaround over the course of the trading day on Wednesday, ending the day sharply higher after seeing some initial weakness. Investors shrugged off some negative news and turned their focus to better-than-expected reports on pending home sales, construction spending, and manufacturing activity.
The initial downward move came on the heels of the release of a report from ADP showing that non-farm private employment fell by a bigger than expected 742,000 jobs following a revised decrease of 706,000 jobs in February. Not long after the open, however, the National Association of Realtors said its index of pending home sales rose 2.1 percent to 82.1 in February from a reading of 80.4 in January. The increase by the index came as a surprise to economists, who had expected the reading to come in unchanged.
The Commerce Department also released its monthly report on construction spending for February, showing that spending fell 0.9 percent. Analysts had expected spending to fall 1.9 percent following a 3.5 percent decline in the previous month. Additionally, the ISM Manufacturing index edged up to 36.3 in March from 35.8 in February, although a reading below 50 still indicates a contraction in the sector. Economists had been expecting the index to come in at 36.0.
On the corporate front, the big three auto-makers continued to disappoint investors during Wednesday's session as all three posted massive declines in monthly sales. General Motors (GM) reported that total vehicle sales fell almost 45 percent in March to 156,380 units. Ford (F) also suffered a massive decline, with March sales plummeting about 41 percent year-over-year. Meanwhile, private auto giant Chrysler performed the best out of the big three, showing a decline in sales of less than 40 percent.
In other news, traders kept an eye on London throughout the session, waiting for news from the G20 summit of global leaders. The leaders will discuss efforts to deal with the weakness in the global economy. Thousands of protesters have taken to the London streets, expressing their anger over the state of the economy.
The major averages continued to perform well in late day trading, ending the session near their best levels of the day. The Dow closed up 152.68 points or 2 percent at 7,761.60, the Nasdaq closed up 23.01 points or 1.5 percent at 1,551.60 and the S&P 500 closed up 13.21 points or 1.7 percent at 811.08.
In economic news, South Korea's trade surplus hit a record high of US$4.6 billion in March, mainly due to imports falling faster than exports, the Ministry of Knowledge Economy said on Wednesday. The trade surplus bettered the previous record of US$3.8 billion registered in April 1998. In March, exports plunged 21.2 percent year-on-year to US$28.3 billion, after a revised 18.3 percent fall in the previous month. Exports fell for the fifth consecutive month in March. Meanwhile, imports slipped 36 percent annually to US$23.7 billion in the month, following a 30.9 percent decline in February. Economists expected exports to slip 21.5 percent and imports to fall 33.7 percent in March.
Also, South Korea's National Statistical Office said that the consumer price index rose 3.9 percent year-over-year in March, slower than the 4.1 percent increase in the previous month. On a monthly basis, consumer prices increased 0.7 percent in March.
Finally, manufacturers' sentiment rose for the second quarter of 2009 rose amid expectations that the economy will stabilize in the country. According to the Ministry of Knowledge Economy, business survey index for manufacturing companies rose to 95 for the second quarter, compared to 61 in the first quarter.
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