RTTNews - The China stock market on Tuesday ended the brutal two-day losing streak that had cost it more than 270 points or 7 percent along the way. The Shanghai Composite Index closed above the 2,900-point plateau, and now investors are looking for the rebound to continue on Wednesday - although caution may be the name of the game ahead of a series of key corporate earnings.
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 SCI finished sharply higher on Tuesday, thanks to gains among the power stocks and the steel producers - while weakness among the financials limited the gains.
For the day, the index gathered 40.25 points or 1.4 percent to close at 2,910.88 after trading between 2,827.11 and 2,920.64 on turnover of 117.4 billion yuan. There were 709 gainers and 223 decliners.
Among the gainers, China Everbright Securities jumped 30 percent in its Shanghai debut, while Datang Power surged by the 10 percent daily limit and Baoshan Iron and Steel added 2.96 percent.
Bucking the trend, Southwest Securities dropped by the 10 percent daily limit, while CITIC Securities lost 4 percent and Haitong Securities fell 4 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 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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