The China stock market picked up just a pair of points on Friday, but that was enough to snap the two-day slide in which it had fallen more than 20 points or 0.95 percent en route to a three-year closing low. The Shanghai Composite Index settled just below the 2,130-point plateau, and now analysts are predicting continued upside at the opening of trade on Monday.
The global forecast for the Asian markets is upbeat following positive economic news out of the United States, although the upside is likely to be capped by profit taking as several of the regional bourses surged on Friday. The U.S. Commerce Department reported that the pace of U.S. economic growth slowed by less than anticipated in the second quarter. Also, Thomson Reuters and the University of Michigan reported that the consumer sentiment index for July was upwardly revised. The European and U.S. markets finished sharply higher and the Asian markets are tipped to open in similar fashion.
The SCI finished barely higher on Friday, nudged into positive territory by gains from the financial sector.
For the day, the index added 2.76 points or 0.13 percent to finish at 2,128.76 after trading between 2,120.63 and 2,139.15. The Shenzhen Composite Index shed 0.5 percent to end at 876.26.
Among the gainers, China Construction Bank climbed 1.6 percent, while Bank of China collected 1.1 percent, China Merchants Bank jumped 1.7 percent and Bank of Communications added 1.0 percent.
The lead from Wall Street is firmly positive as stocks moved sharply higher on Friday, adding to the strong gains from the previous session. The markets benefited from some relatively upbeat U.S. economic data as well as the latest news out of Europe.
The rally followed a Commerce Department report showing that the pace of U.S. economic growth slowed by less than anticipated in the second quarter. GDP increased by 1.5 percent in the second quarter compared to an upwardly revised 2.0 increase in the first quarter. Economists had been expecting GDP to increase by about 1.2 percent.
Meanwhile, Thomson Reuters and the University of Michigan reported that the consumer sentiment index for July was upwardly revised to 72.3 from the mid-month reading of 72.0. Despite the upward revision, the index remains down compared to the final June reading of 73.2 and is well below the nearly five-year high of 79.3 seen in May.
Stocks saw further upside following reports that European Central Bank President Mario Draghi will meet with the president of Germany's Bundesbank Jens Weidmann to discuss new measures to address the ongoing debt crisis. Draghi had earlier promised to do whatever is necessary to support to beleaguered eurozone.
Among individual stocks, shares of Merck (MRK) advanced after the drug giant reported better than expected second quarter earnings. Biotech giant Amgen (AMGN) also turned in a strong performance after reporting second quarter results that exceeded analyst estimates and raising its full-year guidance.
The major averages ended the day firmly in positive territory, with the Dow closing above 13,000 for the first time in well over two months. The Dow jumped 187.73 points or 1.5 percent to finish at 13,075.66, while the NASDAQ soared 64.84 points or 2.2 percent to end at 2,958.09 and the S&P 500 spiked up 25.95 points or 1.9 percent at 1,385.97. The major averages all closed higher for the week as the Dow rose 2 percent, while the NASDAQ advanced 1.1 percent and the S&P 500 climbed 1.7 percent.
by RTT Staff Writer
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