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Firm Start Called For Hong Kong Stock Market

4/24/2012 9:16 PM ET

The Hong Kong stock market turned right back to the upside again on Tuesday, one session after it had ended the three-day winning streak in which it had climbed more than 450 points or 2.1 percent. The Hang Seng Index finished just above the 20,675-point plateau, and now traders are looking for continued support when the market kicks off trade on Wednesday.

The global forecast for the Asian markets is mixed with a positive bias, with much stronger than expected earnings news from Apple outweighing soft U.S. economic news. The Commerce Department reported that new home sales fell in March but still came in well above estimates. Also, the Conference Board showed that U.S. consumer confidence was virtually unchanged in April. The European markets were higher and the U.S. bourses were mixed, and the Asian markets figure to split the difference.

The Hang Seng finished modestly higher on Tuesday, with the upside limited by softness from the financial shares and the oil companies.

For the day, the index climbed 52.77 points or 0.26 percent to finish at 20,677.16 after trading between 20,534.13 and 20,771.79 on volume of 49.70 billion Hong Kong dollars.

Among the actives, CNOOC eased 0.3 percent, while Industrial and Commercial Bank of China lost 0.4 percent and Galaxy Entertainment dropped 1.8 percent.

The lead from Wall Street is inconclusive as traders were reluctant to make any significant moves ahead of the Federal Reserve's monetary policy announcement on Wednesday. The Fed is widely expected to leave interest rates at near-zero levels, but traders will pay close attention to any comments regarding the outlook for further quantitative easing.

A mixed batch of economic data also weighed, with the Commerce Department reporting that new home sales fell 7.1 percent to an annual rate of 328,000 in March from an upwardly revised February rate of 353,000. Despite the drop, sales came in above estimates for a rate of 318,000.

A separate report from the Conference Board showed that U.S. consumer confidence was virtually unchanged in the month of April. The Conference Board said its consumer confidence index edged down to 69.2 in April from a downwardly revised 69.5 in March. Economists had expected the index to slip to 69.7 from the 70.2 originally reported for the previous month.

Among individual stocks, tech giant Apple (AAPL) closed in the red, ending the day down by 2 percent ahead of the release of its fiscal second quarter results after the close of trading. However, after the bell, Apple said that its second quarter profit jumped 94 percent from last year, driven by strong sales of its iPhones and iPad multimedia devices. The company's quarterly earnings per share also breezed past expectations as did its quarterly revenue. The stock surged after hours.

Telecom giant AT&T (T) rose by 3.6 percent after reporting first quarter earnings that exceeded analyst estimates. Diversified manufacturer 3M (MMM) also closed higher after the Dow component reported better than expected first quarter earnings.

On the other hand, shares of Netflix (NFLX) came under pressure after the company reported a narrower than expected first quarter loss but forecast slower subscriber growth for its U.S. video-streaming service.

The major averages closed on opposite sides of the unchanged line. The NASDAQ fell 8.85 points or 0.3 percent to finish at 2,961.60, while the Dow rose 74.39 points or 0.6 percent to end at 13,001.56 and the S&P 500 climbed 5.03 points or 0.4 percent to 1,371.97.

On the economic front, Hong Kong's merchandise trade deficit increased to HK$43.875 billion in March from HK$40.083 billion in the same month last year, the Census and Statistics Department said on Tuesday. In February, the trade balance was a deficit of HK$45.786 billion.

Export of goods decreased 6.8 percent annually to HK$262.425 billion in March. Domestic exports fell 23 percent year-on-year, while re-exports decreased 6.4 percent. Compared to February, overall exports increased 1 percent during the month.

Imports declined 4.7 percent year-on-year to HK$306.301 billion in March. On a monthly basis, the value of arrivals edged up 0.3 percent.

In the three months ended March, Hong Kong's merchandise exports decreased 1.5 percent from the same period last year, while the value of imports edged up 0.7 percent, the agency said.

Also, the Conference Board's leading indicator of China's economic activity on Tuesday marked continued slowing of the economy, with significant downside risks remaining. The Conference Board's leading economic index increased 0.8 percent in March to 230.6, slower than 1 percent increase in February and a 2.1 percent increase in January.

Also, China will continue to prevent risks from property loans as well as risks from local government financing platforms, the China Banking Regulatory Commission (CBRC) said on Tuesday. Risks from real estate loans continued to decline in 2011, the commission said in its 2011 annual report.

The agency also said that the risks from the local government financing vehicles are currently under control. CBRC said it has built a "firewall" between the banking institutions and a "shadow banking." to prevent credit risks from growing.

by RTT Staff Writer

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