RTTNews - The Hong Kong stock market has finished higher now in three straight sessions, surging nearly 2,000 points or 11 percent on its way to an eight-month closing high. The Hang Seng Index is closing on resistance at 19,000 points, and now analysts say the market could break through that barrier at the opening of trade on Tuesday.
The global forecast for the Asian markets is solidly upbeat, thanks to better than expected economic data around the globe that suggests the economic slowdown may be losing steam. Auto makers may be in focus after General Motors officially declared bankruptcy - although the move has largely been priced in and actually is being met with some optimism. The European and U.S. markets ended sharply higher, and the Asian markets are tipped to trade in the green as well.
The Hang Seng finished sharply higher on Monday, thanks to gains among the properties, financials, commodities and communication stocks. Positive sentiment from mainland China also provided a lift after solid PMI data.
For the day, the index soared 717.59 points or 3.95 percent to close at 18,888.59 after trading between 18,415.41 and 18,895.80 on turnover of 100.28 billion Hong Kong dollars.
Among the gainers, Sun Hung Kai Properties was up 3.52 percent, while Cheung Kong added 2.50 percent, Hutchison Whampoa rose 3.03 percent, Henderson Land gained 3.20 percent, China Life rose 6.54 percent, Ping An Insurance jumped 7.72 percent, PICC Property & Casualty surged 13.46 percent, HSBC Holdings added 3.35 percent, Zijin Mining Group jumped 13.55 percent, Zhaojin Mining Industry surged 11.46 percent, Lingbao Gold Company soared 10.79 percent, Sino Gold Mining added 1.12 percent, China Mobile was up 6.07 percent, China Unicom gained 9.26 percent and China Telecom added 5.76 percent.
Wall Street puts forth a broadly positive lead as stocks were able to extend their gains for a third straight session on Monday, seeing a notably strong outing for the first trading day of June. The major averages all finished firmly in positive territory, with the NASDAQ and S&P 500 closing at their best levels of the year. Trader confidence was boosted by an influx of largely promising economic figures, with data from the Institute for Supply Management showing a slower pace of contraction in activity in the manufacturing sector in the month of April.
The report showed that the index of activity in the manufacturing sector rose to 42.8 in May from 40.1 in April, with a reading below 50 indicating a contraction. Economists had been expecting the index to edge up to a reading of 42.0. A turnaround in new orders contributed to the improvement in the sector, with the new orders index climbing to 51.1 in May from 47.2 in April. This marked the first time the index has been above 50 since November of 2007.
Further, construction spending unexpectedly increased in the month of April, according to a report released by the Commerce Department, with the unexpected growth reflecting a notable increase in spending on private construction. The Commerce Department also released a separate report showing that personal income unexpectedly rose in the month of April, with the increase partly due to the reduced taxes and increased social benefit payments associated with the government's economic stimulus plan.
On the corporate front, auto giant General Motors officially filed for bankruptcy on Monday morning. The Obama administration said Sunday that it has deemed GM's reorganization plan viable and will provide the company $30.1 billion in debtor-in-possession financing. President Barack Obama addressed GM's bankruptcy filing Monday, stressing that the government is acting as reluctant shareholders with a 60 percent stake in the company and hoping for a swift bankruptcy process.
Obama said that while GM's trip through bankruptcy will likely be longer than Chrysler's swift 31 days, he hopes that the embattled automaker will emerge from the Chapter 11 process quickly. The president defended his administration's actions with regarding to the automaker, stating that his people inherited a severe financial crisis unlike any we have seen in our time that put the government in an unwelcome position.
The major averages saw additional upside in the afternoon dealing and finished just off of their best levels of the day. The Dow closed up 221.11 points or 2.6 percent, at 8,721.44, the NASDAQ finished up by 54.35 points or 3.1 percent, at 1,828.68, and the S&P 500 rose 23.73 points or 2.6 percent to 942.87.
In economic news, Hong Kong's Census and Statistics Department said on Monday that the retail sales value dropped 4.4 percent year-over-year in April, compared with a revised 7.7 percent fall in the previous month. Economists were looking for a decline of 6.5 percent. In volume terms, retail sales decreased 5.5 percent on an annual basis in April, after falling 9.2 percent decline in March, revised from 9.3 percent reported initially. Economists had expected a decline of 7.2 percent.
Also, the purchasing managers' index in Hong Kong came in at an index score of 44.8 in May, statistics compiler Markit Group said on Monday - up from 44.3 in April. The PMI remains below the boom-or-bust score of 50, which signals contraction. A score above 50 represents expansion. The survey is based on responses from 300 companies and incorporates changes in employment, purchases and output.
Finally, China's purchasing managers' index posted a score of 53.1 in May, the China Federation of Logistics and Purchasing said on Monday, easing from 53.5 in April. Export orders moved up to 50.1 in May from 49.1 in April. The index remained above 50 for the third consecutive month following five straight months below that level. A reading above 50 indicates growth, while a score below 50 represents contraction based on a survey of more than 700 businesses in 11 categories.
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