The Hong Kong stock market gave up less than a dozen points on Tuesday - but that was enough to halt the two-day winning streak in which it had climbed nearly 620 points or 3.1 percent en route to a one-month closing high. The Hang Seng Index finished just above the 19,415-point plateau, and now traders are anticipating renewed support when the market kicks off trade on Wednesday.
The global forecast for the Asian markets is broadly positive ahead of the second and final day of the U.S. Federal Reserve's monetary policy meeting. Traders are optimistic that the Fed will announce further measures to stimulate the sluggish economy as a recent batch of disappointing U.S. economic data has exacerbated concerns about the impact of the ongoing financial crisis in Europe. The European and U.S. markets were higher on Tuesday, and the Asian bourses are expected to open in similar fashion.
The Hang Seng finished flat on Tuesday, nudged into the red by softness from the property sector.
For the day, the index eased 11.14 points or 0.06 percent to finish at 19,416.67 after trading between 19,320.18 and 19,472.05 on volume of 42.42 billion Hong Kong dollars.
Among the actives, China Overseas Land shed 3.3 percent, while HKEx jumped 2.3 percent and Tsingtao Brewery plummeted 7.8 percent.
The lead from Wall Street is upbeat as stocks moved sharply higher on Tuesday as traders expressed continued optimism about the likelihood of further stimulus from the Federal Reserve on Wednesday. The strong gains extended the upward move seen over the past two weeks.
A recent batch of disappointing U.S. economic data has contributed to the optimism about further stimulus, along with continued concerns about the impact of the ongoing financial crisis in Europe. In recent Congressional testimony, Fed Chairman Ben Bernanke said the central bank remains prepared to take action if financial stresses escalate but made no explicit reference to further easing measures.
Many analysts expect the Fed to announce an extension of "Operation Twist," which involves replacing short-term securities in the Fed's bond portfolio with longer-term securities in an effort to push already low long-term interest rates even lower.
Before the start of trading, the Commerce Department reported that housing starts fell 4.8 percent to an annual rate of 708,000 in May from the revised April estimate of 744,000. Economists had expected housing starts to edge up to 720,000 from the 717,000 originally reported for the previous month.
At the same time, building permits, an indicator of future housing activity, jumped 7.9 percent to an annual rate of 780,000 in May from the revised April rate of 723,000. Building permits had been expected to climb to 736,000.
In corporate news, shares of Oracle (ORCL) rose 3.1 percent after the business software giant released Q4 results ahead of schedule, reporting adjusted earnings and revenues that exceeded estimates. Oracle also said its board of directors has authorized the repurchase of up to an additional $10 billion worth of common stock under its existing share repurchase program.
The major averages gave back some ground later in the day but still closed firmly in positive territory. The Dow climbed 95.51 points or 0.8 percent to finish at 12,837.33, while the NASDAQ jumped 34.43 points or 1.2 percent to end at 2,929.76 and the S&P 500 gathered 13.20 points or 1 percent to 1,357.98. The gains lifted the major averages to their best closing levels in over a month, although they remain well off their spring highs.
In economic news, expectations regarding inflation and monetary policy easing in China in Q3 increased notably, a survey by the People's Bank of China showed on Tuesday. The proportion of consumers in China expecting an increase in consumer prices in the coming quarter increased 4.2 percentage points from the previous survey to 35.6 percent.
According to a survey of bankers, 32.4 percent of the respondents expect the authorities to loosen the monetary policy further in the third quarter. However, 25.7 percent of them expect tighter policy conditions.
by RTT Staff Writer
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