PEKING (dpa-AFX) - The China stock market turned right back to the upside again on Wednesday, one session after it had ended the two-day winning streak in which it had collected just 8 points or 0.3 percent. The Shanghai Composite Index finished just below the 2,800-point plateau, and now traders are expecting additional upside when the market kicks off trade on Thursday.
The global forecast for the Asian markets is fairly upbeat, with many of the regional bourses still oversold and due for bargain hunting. Commodities and steel stocks are expected to lead the way, although technology stocks could remain soft. The European and U.S. markets finished firmly in positive territory, and the Asian markets are expected to follow suit.
The SCI finished sharply higher on Wednesday following the release of fairly positive economic data. Financials and gold miners fueled the rally.
For the day, the index surged 40.90 points or 1.5 percent to finish at 2,795.48 after trading between 2,756.03 and 2,797.27. The Shenzhen Composite Index spiked 22.34 points or 1.9 percent to end at 1,214.83.
Among the gainers, Shenzhen Development Bank added 3.2 percent, while Agricultural Bank of China jumped 1.9 percent, Industrial Bank climbed 2.4 percent, Zijin Mining surged 4.2 percent, Zhongjin Gold spiked 4.0 percent and Shandong Gold-Mining gathered 3.6 percent.
The lead from Wall Street is cautiously optimistic as stocks showed a strong upward move on Wednesday morning, although buying interest waned in the afternoon. The major averages subsequently pulled back well off their best levels of the day but still managed close in positive territory.
Much of the buying interest stemmed from comments from Federal Reserve Chairman Ben Bernanke, who testified before the House Financial Services Committee. Bernanke said that the recent sluggishness in the U.S. economy is the result of temporary factors, including high energy prices and supply disruptions caused by Japan's tsunami. He added that the Fed expects to see stronger economic activity and job creation once the shocks subside.
'However, given the range of uncertainties about the strength of the recovery and prospects for inflation over the medium term, the Federal Reserve remains prepared to respond should economic developments indicate that an adjustment in the stance of monetary policy would be appropriate,' Bernanke said.
The Fed Chief noted that the central bank has a number of ways it could act to ease financial conditions further even though interest rates are already at near-zero levels.
The early strength on Wall Street also came as better than expected economic data from China eased some of the recent concerns about the global economic outlook.
However, stocks gave back some ground in afternoon trading due in part to news that Fitch Ratings downgraded Greece's credit rating deeper into junk status, lowering the rating to 'CCC' from 'B+.' Fitch cited the absence of a new, fully-funded and credible EU-IMF program, coupled with heightened uncertainty surrounding the role of private creditors in any future funding as well as the country's weakening macroeconomic outlook.
The pullback by the markets also reflected concerns about whether or not Democrats and Republicans will be able to come to an agreement on raising the debt limit before the August 2nd deadline.
After rising more than 160 points at its high for the session, the Dow ended the day up by 44.73 points or 0.4 percent at 12,491.61. The NASDAQ rose by 15.01 points or 0.5 percent to 2,796.92 and the S&P 500 edged up by 4.08 points or 0.3 percent to 1,317.72.
In economic news, China's gross domestic product was up 9.5 percent on year in the second quarter of 2011, the statistics bureau said on Wednesday - slightly above forecasts for a 9.3 percent gain following the 9.7 percent increase in the first quarter. Seasonally adjusted, GDP was up 2.2 percent on quarter, in line with forecasts after adding 2.1 percent in the previous three months.
Industrial production for June came in stronger than expected at 15.1 percent higher on year, topping forecasts for a rise of 13.9 percent after gaining 14.0 percent in May. Retail sales for June were up an annual 17.7 percent - well above forecasts for a gain of 17.0 percent following the 16.9 percent increase a month earlier. Fixed asset investment for the period of January through June saw an increase of 25.8 percent on year.
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