Asian markets rose to a seven-month high on Wednesday, with some Asian benchmarks up more than 5%, as upbeat economic news from China and the U.S. pulled investors from the sidelines.  Data showed China’s manufacturing rose for the first time in nine months.  China’s Shanghai Composite Index rose 3.3% to 2,559.91 points, while South Korea’s Kospi added 2.1% to 1,397.92, its highest close in 2009.  India’s Sensex index jumped 6.4% and Hong Kong’s Hang Seng climbed 5.5%.

U.S. stock futures suggested a higher opening at the Wall Street. Dow futures were up 49 points, or 0.6%, to 8,230, while the broader Standard & Poor’s 500 futures rose 5.50 points, or 0.6%, to 881.60.

Rising consumer confidence and manufacturing data convinced investors that the worst may have passed, pushing major indices higher last week despite a pullback in financial sector shares.  Tech-heavy Nasdaq gained for the eighth straight week; DJIA and S&P 500 shares have now advanced in seven of the past eight weeks.  For the week, the DJIA rose 1.7%, the NASDAQ 1.5%, and the S&P 1.3%. Volume on the NYSE was a mere 1.3 billion shares, raising questions of whether the recent run, initiated by positive quarterly profit news from the banking majors, has lost steam. Prices of the 10-year Treasury dropped for the sixth straight week, pushing yields higher as risk appetite stirred amid hopes the worst of the recession has passed.

During the week all sectors advanced with the exception of financials, weighed down by concerns over delayed release of stress test results, likely to show capital-raising needs in at least six of the nineteen banks.  JP Morgan’s (NYSE:JPM) reduced profit targets for 2009 and 2010 for numerous firms also weighed on financial stocks.  Weekly gains were led by utilities, up 4.4%, basic materials, up 3.8%, telecommunications up 2.6%, oil and gas up 2.4% and industrials up 2.3%.

The strength witnessed last week emerged from improvement in consumer confidence and manufacturing data as well as a number of earnings that topped Street expectations. On Tuesday the Conference Board reported a huge 46% surge in its consumer confidence index to 39.2 in April versus an expected 29.7. On Friday Reuter’s confidence index also topped estimates at 65.1 in April, beating estimates of 62.  During the week, the ISM manufacturing post of 40.1 beat projections of 38.4. While advance second quarter GDP marked a worse-than-anticipated decline of 6.1%, widely missing projections of a 4.7% decline, 2.8% of the drop was attributed to an inventory contraction, which in itself fueled hopes on a bottoming in the economy’s fall as those stocks need to be rebuilt.

However, Thursday’s Chrysler bankruptcy filing and Friday’s dismal monthly vehicle sales release painted a grim picture of the auto industry. Chrysler warned of hundreds of thousands of job losses should its restructuring take longer than two months.  General Motors (NYSE:GM) is now facing its own struggles between the interests of bondholders and the Treasury, and will join Chrysler in idling production as it restructures. Friday’s Employment Report for April will be of most market-moving potential, expected to reveal the loss of 620,000 jobs, down from the prior month’s 663,000; unemployment rate is expected to jump to 8.9% from 8.5% prior.

The week may also witness release of the stress tests, expected to show Citigroup (NYSE:C) may need an additional $10 billion, and Bank of America (NYSE:BAC) well over $10 billion. Citigroup (NYSE:C) is said to be planning to convert over $15 billion of its trust preferreds into common shares. Financials also received a kick from JP Morgan’s (NYSE:JPM) analyst who noted, “we expect credit deterioration to persist led by rising unemployment and continued sharp declines in home prices,” causing “credit losses likely to increase and loan loss reserves [to] build.” 2009 and 2010 projections were cut for Bank of America (NYSE:BAC), Citigroup (NYSE:C), SunTrust (NYSE:STI), US Bancorp (NYSE:USB), and Wells Fargo (NYSE:WFC). Wells Fargo (NYSE:WFC), however, received Mr. Buffett’s acclaim over the weekend as he noted it as the one stock he would buy if he had to put all his net worth into only one company; Berkshire (NYSE:BRK.A) owns a stake in the firm.

On today’s calendar of reports include construction spending and pending home sales (10:00 AM ET) with Fed’s Hoenig on the financial crisis at 12:30 PM ET and the Fed’s Lacker on the economic outlook at 2:00 PM ET.

While the pace of leading company earnings reports slows this week, earnings season continues, with leading companies Cisco Systems (NASDAQ:CSCO), Walt Disney (NYSE:DIS), Kraft Foods (NYSE:KFT), and Sprint Nextel (NYSE:S).

Zacks Investment Research

Last 5 posts by Zacks Market Commentaries

• CNP & FPL Ink Pipeline Deal - Analyst Blog - November 20th, 2009
• Buffett Borrows for Rail Acquisition - Analyst Blog - November 20th, 2009
• Stone Energy Outdoes Estimates - Analyst Blog - November 20th, 2009
• Smucker's Beats, Raises Guidance - Analyst Blog - November 20th, 2009
• GameStop Meets Expectations - Analyst Blog - November 20th, 2009