Market Commentary and Intraday News

China Stock Market May Find Traction On Thursday

276 days ago

(RTTNews) - The China stock market headed south again on Wednesday, one session after it had ended the two-day slide in which it had retreated almost 40 points or 1.9 percent. The Shanghai Composite Index ended just below the 2,120-point plateau, and now investors are looking at a flat lead when the market opens on Thursday.

The global forecast for the Asian markets is mixed following inconclusive economic data from the United States, as well as uncertain news from Europe. Policymakers of the Bank of England were unanimous in maintaining quantitative easing at GBP 375 billion early this month, the minutes of the August meeting revealed on Wednesday. Also, reports suggest that Greece is set to seek an extension of the austerity program agreement with its lenders. The European and U.S. markets were mixed, and the Asian bourses figure to follow suit.

The SCI finished sharply lower on Wednesday following heavy losses from the coal miners and the brokerages.

For the day, the index plummeted 23.58 points or 1.10 percent to finish at 2,118.95 after trading between 2,118.50 and 2,139.14. The Shenzhen Composite Index lost 0.8 percent to end at 886.98.

Among the decliners, China Shenhua Energy shed 1.6 percent, while China Coal Energy fell 1.5 percent, Yanzhou Coal Mining lost 1.5 percent, Citic Securities dipped 1.0 percent, Southwest Securities dropped 1.9 percent, China Pacific Insurance eased 1.0 percent and New China Life retreated 0.7 percent.

The lead from Wall Street remains inconclusive as stocks turned in another lackluster performance on Wednesday, extending the sideways move seen over the past week. Traders expressed continued uncertainty about the near-term outlook for the markets following a mixed batch of U.S. economy data.

The New York Federal Reserve reported an unexpected contraction in regional manufacturing activity, as its general business conditions index dropped to - 5.9 in August from 7.4 in July, with a negative reading indicating a contraction in regional manufacturing activity. Economists had expected the index to show 7.0.

Meanwhile, the Federal Reserve said industrial production increased by 0.6 percent in July compared to economist estimates for an increase of about 0.5 percent. The growth reflected increased output in each of the manufacturing, mining, and utilities sectors.

Also, the National Association of Home Builders said that its index of homebuilder confidence climbed to 37 in August from 35 in July - beating forecasts for an unchanged reading. With the increase, the homebuilder confidence index rose to its highest level since coming in at 39 in February of 2007.

The Labor Department also released a report showing that consumer prices unexpectedly came in unchanged for the second consecutive month in July.

Among individual stocks, shares of Target moved to the upside after the discount retailer reported better than expected Q2 earnings and raised its full-year guidance. Also, apparel retailer Abercrombie & Fitch also turned in a strong performance after reporting second quarter earnings that fell year-over-year but came in above estimates.

Meanwhile, shares of Deere tumbled by 6.3 percent after the agricultural equipment giant reported third quarter earnings that increased by less than analysts had expected. The company also lowered its full-year revenue guidance.

The major U.S. averages were mixed on Wednesday for the fifth time in the past six sessions. The Dow edged down 7.36 points or 0.1 percent to finish at 13,164.78, while the NASDAQ rose 13.95 points or 0.5 percent to end at 3,030.93 and the S&P 500 inched up 1.60 points or 0.1 percent to 1,405.53.

In economic news, the non-performing loans ratio of Chinese banks remained stable in the second quarter, the China Banking Regulatory Commission said on Wednesday. The average non-performing loan ratio in the banking system came in at 0.9 percent, unchanged from the first quarter.

At the same time, capital adequacy ratio was 12.9 percent at the end of the second quarter, higher than the 12.7 percent seen in the previous quarter. The core capital adequacy ratio climbed to 10.4 percent from 10.3 percent.

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