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The global forecast is a generally positive one for the Asian markets, thanks to stronger than expected corporate results out of the United States. Even the recently battered American financial stocks rallied overnight, although concerns about the mortgage lending industry continued to weigh on investors and capped those gains. That was enough to lead the U.S. markets modestly higher, and the Asian bourses are predicted to do the same.
The JCI finished sharply higher in thin trade and a tight range on Wednesday, paced by a rebound in coal and other energy stocks. Financial stocks also were in favor after being oversold in recent sessions.
For the day, the index added 27.21 points or 1.3 percent to close at 2,069.70 after trading between 2,055.40 and 2,072.61.
Wall Street offers a positive lead as stocks ended Wednesday's session with notable gains after investors looked for bargains following sharp losses in the previous two sessions. Positive quarterly results from Hewlett-Packard (HPQ | Quote | Chart | News | PowerRating) contributed to the strength, although weakness in Fannie Mae (FNM | Quote | Chart | News | PowerRating) and Freddie Mac (FRE | Quote | Chart | News | PowerRating) weighed on the markets at times.
Hewlett Packard gave investors reason to buy into the markets after the printer and computer maker reported better than expected quarterly earnings and offered an upbeat forecast for its current quarter. But Fannie Mae and Freddie Mac continued to pressure the markets, falling more than 20 percent earlier in the week on reports that the Treasury may have to bail them out. Investors have been increasingly worried that if the government does bail them out, their stocks may drop to zero.
Despite the weakness with Fannie Mae and Freddie Mac, other financials rallied in late day trading, contributing to the strength seen in the broader markets at the end of the session. Also, Microsoft Corp. (MSFT | Quote | Chart | News | PowerRating) said as part of its five-year partnership deal with software developer Novell Inc. (NOVL | Quote | Chart | News | PowerRating) it will invest an additional $100 million to buy redeemable certificates for expanded support from Novell to run their products together.
Also, industry data released on Wednesday showed that mortgage application volume declined last week due in part to a 3.7 percent decline in refinancing activity.
The major averages rallied in the final hour of the session, sending the averages back into positive territory. The Dow closed up 68.88 points or 0.6 percent at 11,417.43, the Nasdaq closed up 4.72 points or 0.2 percent at 2,389.08 and the S&P 500 closed up 7.85 points or 0.6 percent at 1,274.54.
In economic news, Indonesia's international reserves were up to $60.56 billion on July 31 from $59.45 billion at the end of June, central bank data showed on Wednesday. Bank Indonesia said on its Web site that base money fell to 346.59 trillion rupiah in the fourth week of July from 349.7 trillion rupiah at the end of June.
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