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Renewed Support Expected For Hong Kong Stocks

The Hong Kong stock market has alternated between positive and negative finishes through the last five trading days since the end of 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 20,740-point plateau, and now traders are looking for a mild rebound when the market kicks off trade on Monday.

The global forecast for the Asian markets is cautiously optimistic, thanks to upbeat earnings news and better than expected consumer sentiment in the United States. Tempering the upside, U.S. GDP increased 2.2 percent in the first quarter compared to 3.0 percent in Q4 - well shy of expectations for a gain of 2.5 percent. Also, Italy's 10-year borrowing costs increased at an auction on Friday, which increased concerns that the country may seek a bailout. The European and U.S. markets finished slightly higher, and the Asian bourses are expected to follow suit.

The Hang Seng finished modestly lower on Friday following a firm start, dragged to the downside by losses from the technology stocks and resource plays.

For the day, the index lost 68.26 points or 0.33 percent to finish at 20,741.45 after trading between 20,648.77 and 20,929.96 on volume of 51.27 billion Hong Kong dollars.

Among the actives, China Coal shed 0.6 percent, while CNOOC eased 0.1 percent, Foxconn International plummeted 15.8 percent, Haitong Securities was flat and PetroChina climbed 3.0 percent.

The lead from Wall Street is positive as stocks moved mostly higher on Friday, although buying interest was relatively subdued. The strength followed upbeat earnings news from big-name companies like Amazon.com (AMZN), with the online retailer surging by 15.8 percent after reporting its first quarter results. Drug giant Merck (MRK) and auto giant Ford (F) also reported better than expected Q1 earnings but ended the day in the red.

Positive sentiment was also generated by a report from Reuters and the University of Michigan showing an unexpected improvement in U.S. consumer sentiment in April. The consumer sentiment index came in at 76.4 compared to the mid-month reading of 75.7. With the upward revision, the index came in above March's final reading of 76.2 and is at its highest level since February of 2011.

The upbeat data helped to offset negative sentiment from the Commerce Department, which reported weaker than expected economic growth in the first quarter. GDP increased 2.2 percent in Q1 compared to the 3.0 percent growth in the fourth quarter. Economists had been looking for 2.5 percent. While GDP rose by less than expected in the first quarter, it still marked the eleventh consecutive quarter of economic growth.

The major averages ended the day in positive territory but off their highs for the session. The Dow edged up 23.69 points or 0.2 percent to finish at 13,228.31, while the NASDAQ climbed 18.59 points or 0.6 percent to end at 3,069.20 and the S&P 500 crept up 3.38 points or 0.2 percent to 1,403.36. The major averages all closed higher for the week as the Dow rose by 1.5 percent, while the NASDAQ and the S&P 500 advanced by 2.3 percent and 1.8 percent, respectively.

by RTT Staff Writer

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