The Hong Kong stock market turned higher again on Tuesday, one session after it had snapped the two-day winning streak in which it had gathered more than 320 points or 1.5 percent. The Hang Seng Index settled just below the 21,800-point plateau, and now analysts are forecasting another rangebound performance at the opening of trade on Wednesday.
The global forecast for the Asian markets continues to be mixed and flattish, thanks to continued uncertainty about the looming fiscal cliff in the United States. Caution ahead of U.S. payroll data later in the week adds to the overall sentiment. The European markets were mixed but little changed on Tuesday and the U.S. bourses were slightly lower - and the Asian markets figure to split the difference.
The Hang Seng finished slightly higher on Tuesday following gains from the financial shares and the oil companies.
For the day, the index collected 32.12 points or 0.15 percent to finish at 21,799.97 after trading between 21,687.88 and 21,853.15 on volume of 52.91 billion Hong Kong dollars.
Among the gainers, China Petroleum and Chemical (Sinopec) climbed 1.6 percent, while PetroChina added 0.8 percent, CNOOC collected 0.5 percent, HSBC gathered 0.6 percent, China Mobile jumped 1.4 percent, China Telecom climbed 2.9 percent and Cheung Kong Infrastructure was up 0.3 percent.
The lead from Wall Street is mildly negative as stocks showed a lack of direction on Tuesday after moving mostly lower in the previous session. The lackluster performance reflected continued uncertainty about the looming fiscal cliff.
The choppy trading came as traders kept a close eye on developments in Washington, where lawmakers are struggling to reach a deficit reduction agreement. Without action by Congress, approximately $600 billion in automatic tax increase and government spending cuts are due to go into effect at the end of the year.
House Republicans unveiled a plan Monday that they claim will reduce the deficit by $2.2 trillion over ten years, but the proposal was rejected by the White House. While the Republican plan includes $800 billion in new revenues, the higher revenues are achieved by closing loopholes rather than raising tax rates on wealthy Americans.
Democrats have claimed that the Republican plan would increase the burden on the middle class and have instead called for the Bush-era tax cuts for high-income earners to expire. President Barack Obama has indicated that any deal will have to include higher tax rates on wealthy Americans.
Analysts have suggested that lawmakers will likely continue to wrangle over how to avoid the fiscal cliff until the days leading up to the end of the year deadline.
Among individual stocks, NetFlix (NFLX) surged up 14 percent after announcing a multi-year licensing agreement with Disney (DIS) that will make the Internet television network the exclusive U.S. subscription television service for films from Walt Disney Studios.
Big Lots (BIG) also showed a strong upward move after the discount retailer reported a much narrower than expected third quarter loss. Shares of Big Lots jumped 11.5 percent.
On the other hand, shares of Pep Boys (PBY) came under pressure after the auto parts retailer reported a third quarter loss compared to a year ago profit. The company also reported weaker than expected sales. Pep Boys posted a 10.4 percent loss on the news.
The major U.S. averages were slightly lower on Tuesday as the Dow edged down 13.82 points or 0.1 percent to finish at 12,951.78, while the NASDAQ slipped 5.51 points or 0.2 percent to close at 2,996.69 and the S&P 500 dipped 2.41 points or 0.2 percent to end at 1,407.05.
In economic news, China will on Wednesday see the November results of the HSBC Services PMI; it came in at 53.5 in October.
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