Profit-taking by traders hit Chinese markets Wednesday, dragging the Shanghai Composite Index down over 3 percent -- its biggest fall in over a month. Elsewhere in Asia, stock markets were mixed, and European bourses recovered from their early losses and traded slightly higher, while Wall Street was poised to open higher.
“The market has accumulated decent gains and faces resistance as the index approaches the 3,400 to 3,500 level,” Qian Qimin, an analyst at Shenwan Hongyuan Group Co. in Shanghai, told Bloomberg, referring to the drastic drop in the Shanghai Composite Index in afternoon trade. “Investors were waiting for opportunities to lock in profits and when there were signs of some profit-taking, others followed suit.”
The drop was much more pronounced in the smaller Shenzhen Composite Index, which slid nearly 6 percent. The rapid sell-off came just a day after the Shanghai Composite Index hit a two-month high, buoyed by hopes of fresh stimulus measures in Beijing.
Reports of the appointment of Fang Xinghai -- who has a reputation for being an advocate of opening China’s markets to foreign firms -- as vice chairman of China’s top securities watchdog also failed to calm investors, who pulled out of the technology and media sectors, which had gained steadily in recent days.
In Japan, the Nikkei 225 index finished 1.9 percent higher, as prospects of more stimulus from the Bank of Japan lifted investor sentiment. South Korea’s Kospi Composite Index ended the day up 0.2 percent, while India’s S&P BSE Sensex ended flat after a day of volatile trade.
In Europe, markets were dragged lower at the open Wednesday -- as investors exercised caution ahead of a European Central Bank meeting later this week -- before paring their losses and trading broadly higher.
The pan-European STOXX 600 was trading up 0.2 percent, London’s FTSE 100 rose 0.4 percent, while Germany’s DAX was up 0.8 percent and France’s CAC 40 rose 0.6 percent.
In the U.S., where the markets ended the previous day flat, Wall Street looked set to regain some momentum Wednesday. Futures for the S&P 500, Nasdaq and Dow Jones were all up nearly 0.4 percent.