The South Korean stock market has finished higher now in back-to-back sessions and in four of the last five trading days, adding nearly 75 points or 7 percent in the process. The KOSPI was unable to close above resistance at 1,200 points, but investors are optimistic that the market will crash through that level at the opening of trade on Tuesday.
The Asian markets draw a sharply positive global forecast, with major gains expected from the financial sector that has been so oversold in recent months - thanks to details on the U.S. plan to remove toxic assets. Some better than expected economic data out of the U.S. adds to the positive sentiment. The European markets finished sharply higher, as did the U.S. markets, and the Asian bourses are forecast to follow that lead.
The KOSPI finished sharply higher on Monday, touching its best finish in six weeks. The financial stocks posted major gains, while the industrial issues and the technology shares also ended the session significantly higher. Steel makers and oil refiners also ended higher.
For the day, the index jumped 28.56 points or 2.4 percent to close at 1,199.50 after trading between 1,179.13 and 1,201.23. Volume was 454 million shares worth 4.6 trillion won. There were 656 gainers and 168 decliners, with 64 stocks finishing unchanged.
Among the gainers, KB Financial Group rose 5.0 percent, while Samsung Securities gained 3.6 percent, Daewoo Engineering & Construction added 5 percent, Daelim Industrial climbed 5.1 percent, POSCO gained 3.4 percent, SK Energy was 2.4 percent higher and Hynix Semiconductor jumped 7.5 percent.
The lead from Wall Street is broadly positive as stocks moved sharply higher over the course of the trading day on Monday, with the major averages more than offsetting the losses posted in the two previous sessions to reach their best levels in over a month. The standout gains came after the Obama administration revealed its plan to help banks sell toxic assets.
The plan unveiled by Treasury Secretary Timothy Geithner will set up an investment fund to buy mortgage-related securities and other assets that are hurting the balance sheets of banks. The new Public Private Investment Program would combine taxpayer money with private funds, aiming to buy loans and free up banks to renew lending.
Geithner's plan involves using up to $100 billion in funds from the $700 billion financial rescue plan passed in 2008 in addition to capital from private investors to generate an estimated $500 billion to purchase the toxic assets, a number that could double to $1 trillion over time.
In economic news, existing home sales unexpectedly rose in the month of February, according to a report released by the National Association of Realtors, with sales rebounding after hitting a twelve-year low in the previous month. The report showed that existing home sales rose 5.1 percent to a seasonally adjusted annual rate of 4.72 million units in February from a pace of 4.49 million units in January. Economists had expected sales to slip to a 4.45 million unit rate.
Some of the strength on the day also came as investors reacted to Canadian integrated oil and natural gas companies Suncor Energy (SU) and Petro-Canada (PCZ) jointly announcing that the companies have agreed to merge in an all-stock deal. Furthermore, Walgreen (WAG) reported second quarter earnings that fell year-over-year but still pleased investors. Comparable stores sales increased 1.3 percent in the quarter, while comparable store front-end sales decreased 1.2 percent.
The major averages accelerated to the upside going into the close, ending the session at or near their best levels of the day. The Dow closed up 497.48 points or 6.8 percent at 7,775.86, the Nasdaq closed up 98.50 points or 6.8 percent at 1,555.77 and the S&P 500 closed up 54.38 points or 7.1 percent at 822.92.
In economic news, officials said on Monday that the South Korean Government, in an effort to prevent the economy from slipping in to recession, is planning to spend an addition 29 trillion won, or US$20.64 billion, and details of the spending plans for this extra budget will be submitted to the Cabinet on Tuesday.
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