The South Korean stock market has finished higher now in four straight sessions, adding more than 70 points or 6 percent in the process. The KOSPI broke through resistance at 1,225 points on Wednesday and now all signs point to continued gains when the market opens for business on Thursday.
The global forecast for the Asian markets is fairly upbeat, thanks to some better than expected economic data out of the United States. The financial stocks, after experiencing a mild correction in the previous session, are expected to resume their upward movement to provide support for the markets. The European markets finished higher across the board, as did the U.S. markets - and the Asian markets are expected to do the same.
The KOSPI finished modestly higher on Wednesday, thanks to gains among the shipbuilders and the oil-related stocks - while the financials and the technology issues wound up mixed.
For the day, the index added 7.32 points or 0.60 percent to close at the daily high of 1,229.02 after dipping as low as 1,211.20. Volume was 488.5 million shares worth 5 trillion won. There were 487 gainers and 318 decliners, with 79 stocks finishing unchanged.
Among the gainers, KB Financial advanced 0.43 percent, while Woori Finance gained 0.92 percent, Hyundai Heavy Industries gained 1.95 percent, Daewoo Shipbuilding advanced 2.22 percent, Samsung Heavy Industries rise 2.99 percent, LG Electronics was up 2.06 percent, LG Display advanced 2.36 percent, SK Holdings gained 3.69 percent and S-oil was up 0.68 percent.
Bucking the trend, Shinhan Financial Group fell 0.92 percent, while Samsung Electronics lost 0.54 percent and Hynix Semiconductor fell 1.92 percent.
The lead from Wall Street is positive as stocks experienced considerable volatility over the course of the trading session on Wednesday, with the major averages eventually ending the session firmly in positive territory. The choppy trading came as traders digested some strong economic data combined with weak demand for a U.S. treasury auction.
Some initial buying interest was generated by a report from the Commerce Department revealing that durable goods orders unexpectedly showed a substantial increase in the month of February after falling in each of the six previous months. The report showed that durable goods orders jumped 3.4 percent in February after falling by a revised 7.3 percent in January. Economists had been expecting durable goods orders to fall by 2.5 percent compared to the 4.5 percent decrease that had been reported for the previous month.
The markets saw some further upside after the Commerce Department released a separate report showing an unexpected increase in new home sales in the month of February. This marked the latest in recent string of positive housing market data. The Commerce Department said that new home sales rose 4.7 percent to an annual rate of 337,000 in February from an upwardly revised January rate of 322,000. The results surprised economists, who had been expecting sales to fall to 300,000 from the 309,000 originally reported for the previous month.
Stocks were unable to sustain the upward move, however, as investors remained skeptical that the better than expected data signals a turnaround for the economy. After hovering in positive territory for much of the morning, stocks showed a substantial turnaround over the course of the afternoon amid a negative reaction to the release of the results of the Treasury Department's auction of $34 billion worth of five-year notes. The auction drew a yield of 1.849 percent and a bid-to-cover ratio of 2.02.
With the bid-to-cover ratio, an indicator of demand, coming in below the 2.21 from the Treasury's previous auction of $32 billion in five-year notes last month, the auction results raised some concerns about demand for U.S. government debt. The major averages subsequently pulled back well off their highs and into the red.
Nonetheless, stocks moved back to the upside going into the close, lifting the major averages back into positive territory. The Dow closed up 89.84 points or 1.2 percent at 7,749.81, the Nasdaq closed up 12.43 points or 0.8 percent at 1,528.95 and the S&P 500 closed up 7.63 points or 1 percent at 813.88.
In economic news, South Korea's composite consumer sentiment index declined to 84 in March from 85 in the previous month, the Bank of Korea said on Wednesday. Consumer confidence fell on consumers concerns of employment stability, inflation and falling income. Consumer sentiment on current living standards fell to 70 from 75, while consumer sentiment on the prospective living standards declined 2 points to 78. Consumer's sentiment regarding the domestic economic situation slipped to 35 from 38, while the expectations of domestic economic situation for the next six months dropped to 64 from 65.
Also, the Ministry of Health, Welfare and Family Affairs said that rules governing investment in domestic stock markets by the country's largest institutional investor, the National Pension Service, have been relaxed. The pension service is now allowed to invest in a range between 10 percent and 24 percent of its total assets in domestic markets, as against its previous range between 12 percent and 22 percent.
Finally, the Korea Automobile Manufacturers Association said that auto exports to Eastern Europe plunged sharply by 70.7 percent during February 2009 to 11,216 vehicles. The head of the Korea Development Institute, Hyun Oh-seok, stated that the country's economy is presently accumulating energy and might rebound from the second half of the year.
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