Market Commentary and Intraday News

China Shares May See Renewed Weakness On Tuesday

259 days ago

(RTTNews) - The China stock market on Monday snapped the three-day slide in which it had retreated more than 25 points or 1.2 percent. The Shanghai Composite Index closed just shy of the 2,060-point plateau, although now investors are bracing for a slightly softer open on Tuesday.

The global forecast for the Asian markets is mixed with a hint of weakness after ratings agency Moody's downgraded the outlook for the European Union to negative from stable. A decline in Germany's manufacturing activity also may weigh on investors. The European markets were higher on Monday, while the U.S. bourses were closed for the Labor Day holiday - and the Asian markets are expected to open lower.

The SCI finished modestly higher on Monday following gains from the property stocks and gold miners.

For the day, the index added 11.63 points or 0.57 percent to finish at 2059.15 after trading between 2041.16 and 2066.78 on volume of 47.91 billion yuan. The Shenzhen Composite Index jumped 16.23 points or 1.9 percent to end at 854.76.

Among the gainers, China Vanke climbed 3.4 percent, while Poly Real Estate surged 7.7 percent, China Merchants Property soared 5.4 percent, Zhongjin Gold jumped 4.6 percent and Shandong Gold-Mining spiked 6.9 percent.

There is no lead from Wall Street, which was closed for the Labor Day holiday, while the news from Europe is mixed - with caution also growing ahead of Friday's all-important nonfarm payroll data from the United States.

Adding to the pessimistic outlook, ratings agency Moody's on Monday downgraded the European Union's outlook to negative from stable, citing a weakened outlook for the region's largest economies and deterioration in credit-worthiness of certain members. The EU's AAA rating was unaffected.

On the economic front, Germany's manufacturing activity declined more than initially estimated for August, final data from Markit Economics showed on Monday. The final Markit/BME Purchasing Managers' Index came in at 44.7 in August, down from the flash reading of 45.1, but rose from 43 in July.

In a separate report, the Eurozone's manufacturing sector continued to contract in August, but a slower pace than in July, survey results confirmed. However, the improvement was slightly weaker than estimated in the flash report. In the U.K., the Markit/Chartered Institute of Purchasing & Supply Purchasing Managers Index rose more than expected to 49.5 from 45.2 in July. Economists had forecast the index to rise to 46.3.

The major European markets were firmly higher on Monday as the DAX in Germany picked up 0.63 percent, while the CAC 40 in France surged 1.19 percent, London's FTSE collected 0.82 percent and the Swiss market added 0.78 percent.

In economic news, China's non-manufacturing sector growth accelerated in August, data from the China Federation of Logistics and Purchasing showed on Monday. The purchasing managers' index for the non-manufacturing sector rose to 56.3 in August from 55.6 in July. A PMI reading above 50 indicates expansion of the sector, while a reading below 50 suggests contraction.

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