Ahead of Friday's Labor Day holiday, the South Korean stock market has finished higher in back-to-back sessions, collecting nearly 70 points or 5 percent along the way as the KOSPI broke through resistance at 1,350 points. Now investors are looking for little movement on Monday ahead of another market holiday on Tuesday, this time for Children's Day - so the market may creep slightly higher in exaggerated trade.
The Asian markets draw a fairly positive if lukewarm global forecast as many of the bourses return to action following Friday's Labor Day holiday. Some economic news out of the United States was not as bad as expected, as were some corporate results. Most of Europe was closed, but for a flat performance from London's FTSE, while the U.S. bourses ended slightly higher - and the Asian markets are also expected to move higher on Monday.
The KOSPI finished sharply higher on Thursday, fueled by gains among the airlines, automobile producers and the financial stocks.
For the day, the index surged 30.94 points or 2.31 percent to close at 1,369.67 after trading between 1,350.46 and 1,377.82. Volume was 794.67 million shares worth 8.42 trillion won, and gainers outnumbered decliners 660 to 192.
Among the gainers, Kia Motor rallied 5.14 percent, while Ssangyong Motor advanced 4 percent, Hyundai Motor moved up 4.26 percent, Samsung Heavy Industries gained 3.05 percent, Hyundai Heavy added 2.68 percent, Korea Exchange Bank rose 4.14 percent, Woori Finance climbed 10.22 percent, KB Financial soared 6.14 percent, KT was up 1.08 percent, Asiana Air Line rallied 5.46 percent, Korean Air Line advanced 3.44 percent, SK Oil gained 3.48 percent, KEPCO moved up 2.19 percent, POSCO rose 2.06 percent, Samsung Electronics rose 1.02 percent and LG Electronics added 1.92 percent.
Bucking the trend, Hynix Semiconductor fell 1.37 percent, while LG Display LCD closed down 0.63 percent and SK Telecom fell 1.87 percent.
The lead from Wall Street is cautiously optimistic as stocks showed a lack of direction throughout the trading day on Friday, with the major averages bouncing back and forth across the unchanged line before ending the day modestly higher. The lackluster performance came as traders digested some mixed earnings and economic news.
On the economic front, the Institute for Supply Management released its report on manufacturing activity in the month of April, showing that activity continued to contract for the month but at a much slower than expected pace. The ISM said its index of activity in the sector rose to 40.1 in April from 36.3 in March, although a reading below 50 indicates a continued contraction in the sector. Economists had been expecting a more modest increase to a reading of 38.4.
Separately, the Reuters/University of Michigan's consumer sentiment index for the month of April was unexpectedly upwardly revised to a reading of 65.1 from the previously reported reading of 61.9. The Commerce Department also released its report on factory orders in the month of March, showing that orders fell by a bigger than expected 0.9 percent following a downwardly revised 0.7 percent increase in February.
In earnings news, Chevron (CVX) closed notably higher after the oil giant reported first quarter earnings that fell sharply year-over-year but came in better than analysts had expected. Shares of Chevron ended the day up 1.2 percent. Chevron reported first quarter earnings of $1.84 billion or $0.92 per share compared to $5.17 billion or $2.48 per share in the year-ago quarter. Analysts had been expecting the company to report earnings of $0.81 per share.
Meanwhile, MetLife (MET) saw considerable weakness on the day after reporting a first quarter loss of $574 million or $0.71 per share compared with a profit of $615 million or $0.84 per share in the same quarter last year. Shares of MetLife closed down 7.7 percent.
The major averages showed a notable upward move going into the close, ending the day in positive territory. The Dow closed up 44.29 points or 0.5 percent at 8,212.41, the NASDAQ closed up 1.90 points or 0.1 percent at 1,719.20 and the S&P 500 closed up 4.71 points or 0.5 percent at 877.52. With the gains on Friday, the major averages all closed higher for the week, with the NASDAQ setting a nearly six-month closing high. While the NASDAQ rose 1.5 percent for the week, the Dow and the S&P 500 posted weekly gains of 1.7 percent and 1.3 percent, respectively.
In economic news, South Korea's annual inflation came in at 3.6 percent in April, slowing from 3.9 percent in the previous month, the National Statistical Office reported - in line economists' expectations. Core inflation that excludes food eased to 4.2 percent from 4.5 percent in March for the lowest since May 2008, when it stood at 3.9 percent. Month-on-month, the consumer price index was up 0.3 percent in April compared to a 0.7 percent rise in March.
Also, the Ministry of Knowledge Economy said the nation registered a record surplus of US$6.02 billion in April, despite the ongoing downturn in overseas shipment. The surplus stood at US$4.29 billion in March. Exports decreased in April due to weakening demand from abroad, but the rate of decline was less than expected. Exports dropped 19 percent to US$30.6 billion and imports totaled US$24.6 billion, down 35.6 percent from April 2008. Economists had expected a 23.2 percent year-over-year drop in exports and a 36.2 percent decline in imports. In March, exports had slipped 22 percent and imports by 35.9 percent
Finally, the statistical office reported that the country's industrial output grew 4.8 percent month-over-month in March. The latest increase came after a revised 7.1 percent rise in the previous month. Year-over -year, industrial output declined 10.6 percent in March, worse than a 10 percent fall in February. Economists were looking for a 13 percent slump for March.
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