(RTTNews) - The China stock market has finished higher now in back-to-back sessions after finally halting the eight-day losing streak that had cost it nearly 200 points or 10 percent along the way. The Shanghai Composite Index broke through resistance at 1,900 points, and now analysts say that the market could extend those gains and move even further to the upside at the opening of trade on Wednesday.

The global forecast calls for modest gains for the Asian markets, thanks to continued strength among the commodities and optimism over the coming administration of U.S. President-elect Barack Obama, which is now less than two weeks away. The European markets were broadly higher, and the U.S. markets saw more modest gains - and the Asian bourses are predicted to move to the upside as well.

The SCI finished sharply higher on Tuesday, thanks to solid gains among the financials and the property stocks. The commodity issues also finished significantly higher - the coal stocks in particular.

For the day, the index soared 56.43 points or 3 percent to close at 1,937.15 after trading between 1,871.97 and 1,938.69 on turnover of 69 billion yuan. The Shanghai A-share index jumped 59.24 points or 3 percent to finish at 2,033.95, while the Shenzhen A-share index added 16.01 points or 2.67 percent to end at 616.24.

Among the gainers, Shanghai Pudong Development Bank was up 5.5 percent, while China Construction Bank rose 2.0 percent, China Shenhua Energy rose 7.8 percent, Datong Coal Industry gained 6.9 percent and China Vanke was up 3.0 percent.

The lead from Wall Street is cautiously optimistic as stocks saw some volatility over the course of the session before ending Tuesday’s trading firmly in positive territory, although well off their highs. The choppy trading came as investors responded to a mixed bag of economic news and remarks by Obama.

On the economic front, reports on service sector activity, factory orders, and pending home sales painted a mixed picture of the economy. The Institute for Supply Management said that its index of activity in the service sector rose to 40.6 in December from a record low of 37.3 in November, although a reading below 50 still indicates a contraction in the sector. Economists had expected the index to edge down to 37.0.

At the same time, the government issued its report on November factory orders, showing a decline of 4.6 percent following a revised 6.0 percent decrease in October. Factory orders were expected to decline 2.6 percent in November. Similarly, weakness was also seen in the pending home sales report that was released by the National Association of Realtors. Pending home sales fell by 4.0 percent to a record low in November, while analysts had expected pending sales to fall by a more modest 1.0 percent.

In other news, President-elect Barack Obama said Tuesday that he expects to inherit a $1 trillion federal deficit, a burden that will likely extend into the next few years. Subsequently, Obama said he and his team want to instill a “sense of responsibility” about future budget choices. That “sense of responsibility” includes a ban on all earmarks from the economic stimulus package he hopes to sign soon after he takes office on January 20th. The president-elect met with both Democrat and Republican lawmakers Monday to discuss his proposed package, aiming at a swift passage following his inauguration.

Meanwhile, the forecast from members of the Federal Open Market Committee deteriorated significantly in the period between their October and December meetings, the minutes from the FOMC’s December meeting revealed. The policy-making arm of the Federal Reserve is expecting economic weakness to extend throughout 2009, a bleak outlook that prompted them to slash the federal funds rate to record low levels.

By the close of trading, the major averages were well off their best levels of the day, but they held onto strong gains. The Dow closed up 62.21 points or 0.7 percent at 9,015.10, the Nasdaq closed up 24.35 points or 1.5 percent at 1,652.38 and the S&P 500 closed up 7.25 points or 0.8 percent at 934.70.

In economic news, China’s central bank and banking regulator are planning to introduce real-estate investment trusts or REITs that allows developers to raise funds, it was announced on Tuesday. Qi Ji, China’s vice minister of housing said REITs would help the country’s real estate developers to raise money without depending commercial banks as the primary source of funds. With the introduction of the new plan, the government is aiming to smooth housing affordability.

China had announced a real estate stimulus package in December to boost the ailing industry. In the next three years, the package is expected to benefit 7.5 million low-income urban families and 2.4 million households living in shantytowns. Houses in rural areas, which are in a dangerously dilapidated condition, would also benefit.

In corporate news, Shanghai Pudong Development Bank saw net earnings for 2008 jump 127 percent on year, the bank said on Tuesday, standing at 12.5 billion yuan. Earnings per share rose by the same rate to 2.21 yuan, the bank said, while total revenue was up 33 percent to 34.4 billion yuan.

For comments and feedback: contact editorial@rttnews.com

Copyright(c) 2009 RealTimeTraders.com, Inc. All Rights Reserved

Posted in Categories: Eurozone, Releases, Stocks, USA.

Subscribe by RSS Subscribe by Email