RTTNews - The South Korean stock market has finished higher now in back-to-back sessions, collecting more than 45 points or 3 percent along the way. The KOSPI is closing on resistance at 1,420 points, and now investors are optimistic that the market can crack that barrier and move to the upside at the opening of trade on Friday.
The global forecast for the Asian markets is cautiously optimistic, thanks to some better than expected economic news out of the United States. Commodities will continue to find support on the rising cost of crude oil - although the importers may see some pressure as a result. The European markets ended modestly higher, as did the U.S. markets - and the Asian bourses are predicted to do the same.
The KOSPI finished slightly higher on Thursday, as strength among the construction and engineering companies was enough to nudge the market into positive territory. For the day, the index added 4.51 points or 0.3 percent to close at 1,419.39 after trading between 1,407.50 and 1,435.28.
Among the actives, Samsung Engineering added 0.6 percent, while Daelim Industrial jumped 4.6 percent, Daewoo Construction & Engineering gained 7.6 percent, POSCO added 1.8 percent, Korean Air fell 2.6 percent and Asiana Airlines dropped 1.2 percent.
The lead from Wall Street is mildly positive as stocks were boosted higher on Thursday by trader reaction to the results of the thirty-year bond auction following a strong start on the heels of some encouraging economic data. The major averages ended the day well off their highs, however, giving back some ground in late day trading.
Stocks showed a notable upward move in afternoon trading as traders digested the results of the Treasury Department's auction of $11.0 billion worth of thirty-year bonds. The sale drew a high-yield of 4.72 percent, its highest level since August of 2007 but below estimates of 4.80 percent. The auction also attracted strong demand, with the bid-to-cover ratio coming in at 2.68. The sale of government-backed debt enjoyed strong interest from foreign financial entities seeking to bolster their positions in guaranteed returns.
On the economic front, a Commerce Department report showed that retail sales rose 0.5 percent in May following a revised 0.2 percent decrease in April. Economists had expected sales to increase by 0.5 percent compared to the 0.4 percent decrease originally reported for the previous month. A considerable increase in sales by gas stations contributed to the retail sales growth, with gas station sales jumping 3.6 percent in May after slipping 0.8 percent in April. Excluding the increase in sales by gas station, retail sales showed a much more modest increase of 0.2 percent.
Separately, the U.S. Labor Department revealed that initial jobless claims, a closely watched gauge of layoffs, came in at 601,000 for the week ended at June 6th. This was down 24,000 from the previous week's revised level of 625,000. However, continuing claims, which measure the number of people receiving ongoing unemployment help, rose to 6.816 million in the week ended May 30th. Due to an upward revision to the previous week's figure, continuing claims rose to a new record high for the 19th consecutive week.
In other news, the House Oversight and Government Reform Committee hosted former Bank of America CEO Ken Lewis as part of a growing investigation into whether government officials pressured the bank to withhold details about the purchase of Merrill Lynch from investors despite ballooning losses at the brokerage firm. While Lewis told the committee that the alleged threats from federal officials to take drastic actions if Bank of America backed out of the deal influenced his decision, he said they were not the deciding factor.
The major averages ended the session moderately higher, although well off their best levels of the day. The Dow closed up 31.90 points or 0.4 percent at 8,770.92, the NASDAQ closed up 9.29 points or 0.5 percent at 1,862.37 and the S&P 500 closed up 5.74 points or 0.6 percent at 944.89.
In economic news, the Bank of Korea on Thursday kept interest rates on hold for a fourth consecutive month, maintaining the record low of 2.00 percent in line with expectations. Before also holding rates at the March 12, April 9 and May 12 meetings, the bank had trimmed rates by 50 basis points to 2 percent on February 12, marking the sixth rate cut in the previous four months.
The BoK had pared rates by 25 basis points on October 9 and then slashed them again by 75 basis points in an emergency meeting on October 27. Then on December 11, the bank slashed rates by another 100 basis points in the largest rate cut in the bank's history - since it started adopting a benchmark interest rate in 1999. On January 9, the bank trimmed rates by 50 basis points to 2.50 percent.
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