RTTNews - The China stock market has finished higher now in back-to-back sessions, collecting nearly 80 points or 2.7 percent on its way to an 11-month closing high. The Shanghai Composite Index regained support at 2,850 points, and now investors are looking for additional upward movement at the opening of trade on Friday.
The Asian markets draw a mildly positive lead from the global forecast as several of the regional bourses have been oversold in recent sessions - the financials in particular. Some better than expected economic data out of the United States is likely to add to the positive sentiment. The European markets ended broadly higher, while the U.S. bourses also finished with mostly modest gains - and the Asian markets are also pegged to move higher.
The SCI finished sharply higher on Thursday, bucking the regional trend of decline. Financial shares saw significant gains, while the energy stocks and medical suppliers also wound up in positive territory.
For the day, the index was up 43.78 points or 1.56 percent to close at 2,853.90 after trading between 2,810.85 and 2,855.42. The Shenzhen Index was up 111.14 points or 1.01 percent to close at 11,151.63 for a combined turnover of 225.08 billion yuan. Gains outnumbered losses by 520 to 315 in Shanghai and 414 to 316 in Shenzhen.
Among the gainers, Beijing Tiantan Biological Products rose by the 10-percent daily limit, as did Henan Taloph Pharmaceutical and Guilin Layn Natural Ingredients, while PetroChina rose 1.15 percent, Sinopec was up 3.07 percent, China Construction Bank added percent and China Industrial Bank rose 4.05 percent.
Wall Street offers a cautiously optimistic lead as stocks finished largely on the upside Thursday after trading in a range for most of the session. While the tech-heavy NASDAQ closed nearly flat, the Dow and the S&P 500 posted notable gains as traders reacted to some encouraging economic data.
Some buying interest was generated by the release of a report from the Philadelphia Federal Reserve showing that the pace of contraction in the mid-Atlantic region's manufacturing slowed by much more than economists had been anticipating. The Philly Fed said its index of activity in the manufacturing sector rose to a negative 2.2 in June from a negative 22.6 in May, although a negative reading still indicates a contraction. Economists had been expecting a much more modest increase to a reading of negative 17.0.
Separately, a report from the Conference Board showed that its leading indicators index rose 1.2 percent in May following an upwardly revised 1.1 percent increase in April. Economists had expected the index to increase by 1.0 percent, matching the increase originally reported for the previous month.
While employment data from the Labor Department showed an increase in weekly jobless claims, some optimism was generated by a drop in continuing claims, which fell by 148,000 in the week ended June 6th to 6.687 million. This marked the first drop in continuing claims since the week ended January 3rd.
Meanwhile, on Capitol Hill, both Republicans and Democrats on the Senate Banking Committee expressed skepticism about Treasury Secretary Timothy Geithner's proposal to set up the Federal Reserve as the primary regulator of risks to the entire financial system. Geithner responded by pointing out that central banks around the world generally have the authority to set monetary policy and to deal with the stability of financial systems.
After closing lower in the three previous sessions, the Dow closed up 58.42 points or 0.7 percent at 8,555.60 and the S&P 500 closed up 7.66 points or 0.8 percent at 918.37. Meanwhile, the NASDAQ underperformed throughout the session and closed down 0.34 points or less than a tenth of a percent at 1,807.72.
In economic news, the World Bank on Thursday raised its growth forecast for China, although it said it does not expect a high-single digit rebound until the world economy recovers convincingly. At the same time, the bank said there was no need for an additional stimulus for the economy.
In it quarterly update, the World Bank raised its 2009 growth forecast for the country to 7.2% from 6.5 percent estimated in March. Growth in China should remain respectable this year and next, although it is too early to say a robust sustained recovery is on the way, Ardo Hansson, Lead Economist for China said. The Chinese economy grew 6.1 percent in the first quarter, its slowest pace since the data began in 1992.
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