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The Hong Kong stock market has finished higher now in two straight sessions, collecting more than 700 points or 3.5 percent along the way. The Hang Seng Index moved above the 20,600-point plateau, but now investors are bracing for heavy losses at the opening of trade on Wednesday.
The global forecast for the Asian markets calls for heavy selling pressure. Commodities are likely to lead the markets lower - gold and oil, in particular - although the weakness is expected to be broadly based and may also include technology, financials and properties. The European and U.S. markets ended sharply lower, and now the Asian bourses are tipped to follow suit.
The Hang Seng finished sharply higher on Tuesday, thanks to solid gains from the financial shares and the property stocks.
For the day, the index climbed 245.73 points or 1.21 percent to finish at 20,623.00 after trading between 20,120.10 and 20,711.75 on turnover of 60.13 billion Hong Kong dollars.
Among the gainers, HSBC Holdings added 1.97 percent, while Bank of China gained 1.31 percent, China Construction Bank was up 1.20 percent, Bank of Communications climbed 0.88 percent, Longfor Properties surged 6.34 percent, Shimao Property Holdings jumped 5.17 percent, Henderson Land Development was up 4.19 percent, Sun Hung Kai Properties gained 3.43 percent, BYD Company added 4.01 percent, TCL Communication Tech surged 9.36 percent and Irico Group spiked 5 percent.
The lead from Wall Street is broadly negative as stocks saw substantial weakness on Tuesday, with a leading gauge of consumer confidence falling to its lowest level in ten months. The major averages all closed firmly in negative territory, moving further off of Friday's one-month closing highs.
The sell-off came after the Conference Board said its consumer confidence index fell to 46.0 in February from an upwardly revised 56.5 in January. Economists had been expecting the index to edge down to 55.0 from the 55.9 originally reported for the previous month.
In earnings news, home improvement retailer Home Depot Inc. (HD) and Target Corp. (TGT) both reported fourth-quarter earnings and revenues that topped estimates. Fellow retail giant Macy's (M) also reported earnings that were better-than-expected, although its revenues came in just short of estimates.
Meanwhile, news from the Federal Deposit Insurance Corp. weighed on the financial sector today, as the agency reported that more than 700 U.S. banks appeared on the government's list of troubled lenders in the fourth quarter of 2009. Federally insured banks posted $915 million in profits during the quarter, but the number of institutions under scrutiny for risk of failure also rose.
The major averages saw some downside in late-session dealing, moving back toward their lows. The Dow lost 100.97 points or 1 percent to close at 10,282.41, the NASDAQ fell by 28.59 points or 1.3 percent to 2,213.44 and the S&P 500 slipped by 13.41 points or 1.2 percent to 1,094.60.
In economic news, Hong Kong will on Wednesday announce gross domestic product figures for the fourth quarter of 2009. Analysts are expecting GDP to add 0.4 percent on quarter and fall 2.4 percent on year after climbing 2 percent on month and 1.5 percent on year in the previous three months.
Also, Hong Kong's Census and Statistics Department said on Tuesday that the consumer price index rose 1 percent year-on-year in January, slower than the 1.3 percent growth in the previous month. The consumer price inflation came in line with economists expectations.
The underlying CPI, which is netting out the effects of all government's one-off relief measures, showed a flat reading in January, compared to the 0.3 percent growth in the previous month.
On a seasonally adjusted basis, the average monthly rate of CPI was 0.3 percent in the November to January period, compared to the 0.8 percent increase in the October to December period. During the period, the underlying CPI was 0.2 percent.
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