The South Korean stock market has finished higher now in back-to-back sessions, gathering a modest 8 points or 0.25 percent in the process. The KOSPI is closing on resistance at 1,340 points, and now investors are optimistic that the market will break through that level at the opening of trade on Wednesday.
The global forecast for the Asian markets is fairly optimistic, despite some weaker than expected corporate earnings news. But the financials are expected to climb following positive comments from U.S. Treasury Secretary Timothy Geithner. The European markets were mixed and largely near the unchanged line, while the U.S. markets ended sharply higher - and the Asian markets are tipped to land somewhere in between.
The KOSPI finished barely higher on Tuesday but bucked the regional trend of decline. The market shrugged off deep losses at the opening thanks to bargain hunting among the shipbuilders and the technology stocks - although weakness among the financials limited the gains.
For the day, the index was up 0.42 points or 0.03 percent to close at 1,336.81 after trading between 1,303.22 and 1,338.48. Volume was 629.61 million shares worth 6.4 trillion won. There were 412 gainers and 398 decliners.
Among the gainers, Daewoo Shipbuilding rose 1.47 percent, while Samsung Heavy Industries advanced 3.41 percent, Hyundai Heavy added 0.47 percent, LG Electronics rose 0.95 percent, Korean Air Line closed up 0.50 percent, KEPCO was up 0.96 percent, SK Telecom rose 0.27 percent, KT gained 0.27 percent and LG Display LCD added 0.94 percent.
Bucking the trend, POSCO fell 2.30 percent, while Samsung Electronics was down 0.17 percent, Hyundai Motor declined 2.12 percent, Kia Motors fell 2.14 percent, SK Oil was down 2.42 percent, Korea Exchange Bank retreated 0.81 percent, Woori Finance shed 1.96 percent, KB Financial fell 3.12 percent, Hynix Semiconductor was down 0.34 percent and Asiana Air Line fell 1.19 percent.
Wall Street offers a broadly positive lead as stocks showed a strong upward move over the course of the trading day on Tuesday, partly offsetting the steep losses posted in the previous session. While stocks saw initial weakness on disappointing earnings news, a positive reaction to comments from Geithner drove the markets higher.
The initial weakness came after Dow component Merck (MRK) reported first quarter earnings that fell short of analyst estimates and lowered its full year revenue guidance. Caterpillar (CAT) also slashed its full-year guidance, although it reported much better than expected adjusted first quarter earnings.
In other earnings news, chemical giant DuPont (DD) reported first quarter earnings that fell year-over-year and lowered its full-year guidance. The company's downwardly revised earnings guidance brought it in line with analyst estimates.
The turnaround by the markets was partly due to comments from Geithner, who assured the Congressional Oversight Panel that there is enough money left in the government's $700 billion financial rescue program to stabilize the financial system. Geithner said there is at least $134.4 billion in funds left. The Treasury Secretary also said that the vast majority of U.S. banks have enough capital and hinted that the credit markets may be thawing following their deep freeze.
Indicators on interbank lending, corporate issuance and credit spreads generally suggest improvements in confidence in the stability of the system and some thawing in credit markets, Geithner said.
The major averages moved to the upside going into the close, ending the session at or near their best levels of the day. The Dow closed up 127.83 points or 1.6 percent at 7,969.56, the NASDAQ closed up 35.64 points or 2.2 percent at 1,643.85 and the S&P 500 closed up 17.69 points or 2.1 percent at 850.08.
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