The South Korea stock market has closed higher now in back-to-back sessions, collecting almost 40 points or 2.1 percent along the way. The KOSPI finished just below the 1,885-point plateau, and now analysts are forecasting further upside at the opening of trade on Wednesday.
The global forecast for the Asian markets remains upbeat on optimism that the European Central Bank may provide further stimulus after disappointing economic data. In particular, the Italian economy remained stuck in recession in Q2 as austerity measures weighed heavily on economic activity. Also generating interest, Boston Federal Reserve President Eric Rosengren called for an "open-ended" quantitative easing program to boost economic growth. The European markets were mostly higher and the U.S. bourses were firm, and the Asian markets are tipped to open higher.
The KOSPI finished flat on Tuesday as gains from the construction sector were wiped out by losses from the telecoms.
For the day, the index added 0.92 points or 0.05 percent to finish at 1,886.80 after trading between 1,881.66 and 1,891.60.
Among the actives, Hyundai Engineering and Construction climbed 2.1 percent, Daewoo Engineering and Construction jumped 2.9 percent and Korea Aerospace Industries surged 6.1 percent, while SK Telecom shed 2.1 percent, KT Corp dipped 1.9 percent and Halla Climate Control Corp plummeted 13.2 percent.
The lead from Wall Street continues to be positive as stocks moved mostly higher on Tuesday, extending the upward move in the two previous sessions. The continued strength was partly due to optimism that the European Central Bank will unveil additional measures to address the ongoing debt crisis following the release of disappointing economic data from the region.
Data from Europe showed that the Italian economy shrank in the second quarter, marking the fourth consecutive quarter of contraction. A separate report showed a steeper than expected drop in German factory orders in June.
Buying interest was also generated by comments by Boston Federal Reserve President Eric Rosengren, who called for an "open-ended" quantitative easing program to boost economic growth.
"What I would argue for, actually, is to have it open ended. That we focus on economic outcomes," Rosengren said. "I would argue that if we do a quantitative easing program, again, we should be using economic outcomes as what we're trying to get."
Traders shrugged off a report from the Federal Reserve showing that consumer credit rose by $6.5 billion in June following a downwardly revised increase of $16.7 billion in May. Economists had expected an increase of $10.3 billion versus the $17.1 billion increase originally reported for May.
Among individual stocks, shares of Tenet Healthcare moved sharply higher after the hospital operator reported stronger than expected second quarter earnings. Video game maker THQ Inc. also turned a strong performance after reporting a first quarter profit compared to a year-ago loss.
Meanwhile, Pfizer and Johnson & Johnson moved to the downside after halting studies of an experimental drug for Alzheimer's disease after it failed in a second clinical trial.
The major averages pulled back off their best levels of the day but remained firmly positive on Tuesday. The Dow rose 51.09 points or 0.4 percent to finish at 13,168.60, while the NASDAQ jumped 25.95 points or 0.9 percent to end at 3,015.86 and the S&P 500 advanced 7.12 points or 0.5 percent at 1,401.35. The gains lifted the major averages to new three-month closing highs, with the NASDAQ and the S&P 500 climbing back above the key psychological levels of 3,000 and 1,400, respectively.
In economic news, South Korea's department store sales slipped 0.9 percent annually in July, the Ministry of Strategy and Finance said on Tuesday, following a 2 percent drop in June. At the same time, sales at the top three discount stores dropped 8.3 percent year-on-year, bigger than the 7.2 percent fall in the prior month.
by RTT Staff Writer
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