South Korea on Wednesday snapped the three-day losing streak that had cost it nearly 70 points or 5.5 percent on its way to a three-week closing low. The KOSPI is closing on resistance at 1,340 points, and analysts forecast that the market could crack that barrier at the opening of trade on Thursday.
The global forecast for the Asian markets is generally upbeat, despite weak GDP numbers out of the United States. Financial stocks also could be in focus following a shakeup at the top of Bank of America. The European markets finished sharply higher, as did the U.S. markets - and the Asian bourses are predicted to follow that lead.
The KOSPI finished sharply higher on Wednesday, lifted by bargain hunting after the recent skid. Financials were up sharply, as were the technology stocks and the industrial issues.
For the day, the index jumped 38.18 points or 2.94 percent to close at 1,338.42 after trading between 1,299.98 and 1,338.43. Volume was 591.29 million shares worth 5.58 trillion won, with gainers outnumbering decliners by 681 to 134.
Among the gainers, Shinhan Financial Group rose 5 percent, while KB Financial Group climbed 5.8 percent, Hynix Semiconductor rallied 4.29 percent, LG Electronics jumped 4 percent, Samsung Electronics rose 1.91 percent, LG Display LCD advanced 1.61 percent, Korea Exchange Bank rallied 4.94 percent, Woori Finance jumped 6.26 percent, Hyundai Heavy Industries rose 2.99 percent, Samsung Heavy Industries gained 2.43 percent, Daewoo Shipbuilding added 2.71 percent, Ssangyong Motor was up 1.69 percent, Hyundai Motor added 2.82 percent, POSCO rose 2.37 percent, KEPCO rallied 5.38 percent, S-Oil gained 2.76 percent, SK Oil rose 1.77 percent, KT Telecom moved up 2.07 percent, SK Telecom closed up 0.27 percent, Korean Airline advanced 2.44 percent and Asiana Air Line closed up 1.81 percent.
Wall Street offers a positive lead as stocks turned in a strong performance over the course of the trading day on Wednesday, with the major averages more than offsetting the losses posted in the two previous sessions. The strength in the markets came as investors shrugged off some weak GDP results and mulled over remarks from the Federal Reserve.
Before the opening bell, the Commerce Department released a report showing that GDP decreased at an annual rate of 6.1 percent in the first quarter, better than the 6.3 percent drop in the previous quarter, but considerably worse than the 4.7 percent decline economists had anticipated. A steep drop in private inventories played a big part in the sharper than expected contraction in GDP, however, with the drop in inventories subtracting 2.8 percentage points from first quarter GDP.
The substantial decline in inventories helped to offset a rebound in consumer spending, which rose by a bigger than expected 2.2 percent in the first quarter after falling by 4.3 percent in the fourth quarter and 3.8 percent in the third quarter.
Traders also kept a close eye on the Federal Reserve, which announced its latest decision on interest rates following a two-day monetary policy meeting. As expected, the Fed left its target range for the federal funds rate at 0 to 0.25 percent and reiterated that it expects that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period.
The Fed's accompany statement was largely unchanged from the statement issued following its March meeting, although it did acknowledge that the pace of contraction in economic activity appears to be somewhat slower.
On the corporate front, Bank of America (BAC) was on investors' minds during the session as Chairman and Chief Executive Ken Lewis faced severe shareholder anger at the bank's annual meeting. After the bell, Lewis was removed as chairman but retained the title of CEO.
The major averages moved off their best levels of the day going into the close but remained firmly positive. The Dow closed up 168.79 points or 2.1 percent at 8,185.73, the NASDAQ closed up 38.13 points or 2.3 percent at 1,711.94 and the S&P 500 closed up 18.48 points or 2.2 percent at 873.64. With the upward moves, the NASDAQ ended the session at its best closing level in nearly six months, while the Dow set a more than two-month closing high and the S&P 500 set a three-month closing high.
In economic news, South Korea will on Thursday release March numbers for industrial output, service industry output and its leading index. Industrial production is expected to fall 13 percent on year following the 10.3 percent annual decline in February. Service industry output was down 0.1 percent on year in the previous month, while the leading index was down an annual 4 percent a month earlier.
Also, South Korea saw a record current account surplus in March, the Bank of Korea said on Wednesday, coming in at $6.65 billion. That follows the 3.56 billion surplus in February. The goods account surplus was 6.98 billon dollars, an increase of 3.87 billion dollars from February's 3.11 billion dollars. The annual rate of decrease of imports accelerated, while that of exports narrowed compared to the previous month.
The services account deficit stood at 0.65 billion dollars, up from 0.53 billion dollars a month earlier. Among the component account the travel account surplus narrowed, the data showed, while the other service account deficit widened as did transport account surplus. The income account shifted to a deficit of 0.22 billion dollars from a surplus of 0.48 billion.
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