RTTNews - The South Korean stock market has finished higher now in three straight days, adding more than 20 points or 1.5 percent in the process. The KOSPI is closing on resistance at 1,400 points after giving it up last week, and now investors are hopeful that the market will surpass that level at the opening if trade on Monday - although a batch of economic data could affect trade.
South Korea is scheduled to release a raft of data on Monday, including final Q1 GDP as well as May figures for import, exports, trade balance and inflation. Gross domestic product is expected to contract 3.8 percent on year versus the preliminary report that showed a 3.4 percent decline. Imports are called lower by 38.3 percent on year after the 35.6 percent annual contraction last reported. Exports are seen down by 28.1 percent on year versus the 19.6 percent in the preliminary report. The trade surplus is expected to come in at $6.9 billion after being first pegged at $5.8 billion. Inflation is forecast at 2.8 percent on year, down from 3.6 percent in April.
The global forecast for the Asian markets is optimistic thanks to positive economic and corporate releases at the end of last week. U.S. auto giant General Motors is expected to declare bankruptcy on Monday, although it has already been priced in by many of the markets - and it may affect auto stocks throughout the region. The European markets were mostly higher on Friday, and the U.S. bourses were sharply up - and the Asian markets are forecast to move higher as well.
The KOSPI finished slightly higher on Friday, thanks to gains among the auto makers and the technology issues - although the gains were largely offset by weakness among the financials. For the day, the index added 3.72 points or 0.3 percent to close at 1395.89 after trading between 1,380.68 and 1,398.44.
Among the actives, Samsung Card ended up 5.1 percent, while Samsung Electronics lost 0.2 percent, Hyundai Motor gained 2.2 percent, LG Electronics rose 0.4 percent, Hyundai Heavy Industries fell 4.4 percent, Shinhan Financial lost 1.7 percent and Daewoo Securities dropped 1.9 percent.
The lead from Wall Street is broadly positive as stocks saw some further upside over the course of the trading day on Friday after a considerable upward move in the previous session. A late-session rally helped the major averages to finish the month of May on a high note, further building on recent gains.
Early this morning, traders digested a revised May consumer sentiment report from Reuters and the University of Michigan that showed its best results in eight months. The revised reading came in at 68.7, higher than the previously reported reading of 67.9. The result was also higher than April's final level of 65.1. Analysts expected the survey to yield a reading of 68.0.
Separately, the Commerce Department said that gross domestic product for the first quarter contracted, although at a slower rate than previously estimated. Specifically, the data said that gross domestic product fell 5.7 percent in the first quarter compared to the advance estimate of a 6.1 percent decrease. Economists had been expecting the pace of contraction to be revised to 5.5 percent.
Meanwhile, optimism was limited by manufacturing data from the Chicago area that continued to show a notable slowdown in the region. The ISM-Chicago said its index of activity in the manufacturing sector fell to 34.9 in May from 40.1 in April, with a reading below 50 indicating a contraction. Economists expected the index to edge up to a reading of 42.0.
On the corporate front, automaker General Motors (GM) plans to file for bankruptcy protection on Monday, according to reports. Most of the company's assets would be sold to a new company sponsored by the U.S. Treasury Department. UAW-represented employees have ratified modifications to the GM-UAW 2007 national labor agreement. The amended agreement covers about 54,000 hourly employees located in 46 U.S. facilities and is expected to help GM restructure when it enters bankruptcy.
In other news, President Barack Obama announced the establishment of a cyber security office. The new office is expected to establish a system that will restrict outside access to government networks, which have been identified as an area of concern by the administration. In addition to announcing the new office, Obama also stated his goal for a new education initiative aimed at increasing awareness of cyber security threats.
The major averages soared in the last 30 minutes of trading, closing near their best levels of the day. The Dow closed up 96.53 points or 1.2 percent at 8500.33, the NASDAQ closed up 22.54 points or 1.3 percent at 1774.33, and the S&P 500 finished up 12.31 points or 1.4 percent at 919.14. The gains helped the major averages close higher for both the week and the month of May. The Dow rose 4.1 percent for the month, adding to the gains posted in both March and April. The NASDAQ and the S&P 500 posted monthly gains of 3.3 percent and 5.3 percent, respectively.
In economic news, South Korea's industrial output fell 8.2 percent year-on-year in April compared to a 10.5 percent drop in March, the National Statistical Office said Friday. Economists expected a decline of 9.4 percent. Month-on-month, industrial output rose 2.6 percent in April, slower than a 4.9 percent rise in March. On a monthly basis, industrial output increased for the third consecutive month in April.
Finally, South Korea's business survey index for manufacturers rose to 76 in June from 71 in May, the Bank of Korea said Friday. A reading below 100 indicates pessimists outnumber the optimists. Meanwhile, the BSI for non-manufacturers increased to 76 in June from 74 in the previous month. On a seasonally adjusted basis, the BSI for manufacturers climbed to 74 in June from 67 in May, while it increased to 75 from 68 for non-manufacturers.
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