The Hong Kong stock market has closed higher now in three consecutive trading days, climbing more than 440 points or 2.1 percent along the way. The Hang Seng Index finished just above the 20,970-point plateau, and now investors are anticipating further upside when the market kicks off trade on Monday.
The global forecast for the Asian markets is broadly positive as they get their first chance to react to better than expected employment data out of the United States. Technology stocks, financials, properties and oil companies figure to provide support. The European and U.S. markets ended sharply higher on Friday, and the Asian markets are also expected to track to the upside.
The Hang Seng finished modestly higher on Friday, thanks to gains from the airlines, property stocks and automobile producers.
For the day, the index collected 102.58 points or 0.49 percent to finish at 20,971.50 after trading between 20,860.89 and 21,028.66 on turnover of 72.65 billion Hong Kong dollars.
Among the gainers, GAC Group surged 6.09 percent, Dongfeng Motors added 3.62 percent, BYD Company gained 2.64 percent, Cathay Pacific was up 2.38 percent, Air China rose 2.02 percent, China Southern Airlines jumped 1.85 percent, China Resources Land gathered 2.22 percent, Henderson Land added 1.06 percent and Sun Hung Kai Properties gained 0.45 percent.
The lead from Wall Street is broadly optimistic as stocks rallied to their best closing levels in three weeks on Friday, as a softer than forecast drop in August jobs helped to alleviate some fears of a double-dip recession. Nonetheless, the day's buying may have been held back by a worse than expected reading on service sector activity.
Before the start of trading, the Labor Department said that non-farm payroll employment fell by 54,000 jobs in August, matching the revised decrease seen in July. Economists had expected employment to fall by about 120,000 jobs compared to the loss of 131,000 jobs originally reported for the previous month. While government employment showed a notable decrease due to the elimination of 114,000 temporary census jobs, private sector employment increased for the eighth consecutive month, rising by 67,000 jobs.
Despite the smaller than expected decrease in non-farm employment, however, the unemployment rate still edged up to 9.6 percent in August from 9.5 percent in July. The modest increase in the unemployment rate came in line with economist estimates.
Meanwhile, the Institute for Supply Management said its non-manufacturing index fell to 51.5 in August from 54.3 in July, although a reading above 50 indicates continued growth in the service sector. Economists had expected the index to show a more modest decrease to a reading of 53.0. With the bigger than expected decrease, the non-manufacturing index fell to its lowest level since coming in at 50.5 in January.
In corporate news, video game maker Take-Two Interactive (TTWO) reported a third quarter profit while analysts expected a loss, with the results reflecting the strong performance of Red Dead Redemption, which was launched in May. Revenues also firmly beat estimates and the company raised its guidance for the fourth quarter and fiscal year 2010.
Tax preparation company H&R Block (HRB) reported a narrower than expected loss for its first quarter on revenues that topped expectations by nearly $10 million. Meanwhile, Campbell Soup Co. (CPB) posted fourth quarter revenues that missed forecasts while projecting 2011 sales below expectations.
The major averages edged higher going into the close, ending the day near their highs for the session. The Dow jumped by 127.83 points or 1.2 percent to end at 10,447.93, the NASDAQ advanced by 33.74 points or 1.5 percent to 2,233.75 and the S&P 500 surged up 14.41 points or 1.3 percent to 1,104.51. With the strong gains on the day, the major averages all showed notable upward moves for the week. The Dow rose by 2.9 percent for the week, while the NASDAQ and the S&P 500 both rose by 3.7 percent.
In economic news, Hong Kong's private sector growth accelerated in August, extending the period of expansion to 13 months, new survey data showed on Friday.
Markit Economics said the HSBC purchasing managers' index rose to a seasonally adjusted 52.3 from 51.3 in July. A reading above 50 indicates expansion while one below suggests contraction.
New work received by Hong Kong firms rose solidly in August, regaining momentum lost in the previous month. New orders received from mainland China also rose, although the rate of growth slowed for a fourth successive month. Stronger activity translated to higher employment in the service sector, extending the sequence of job creation to 11 months.
For comments and feedback: editorial@rttnews.com