RTTNews - The China stock market has finished lower now in two of four sessions since the end of the four-day slide that had cost it more than 220 points or 6.3 percent. The Shanghai Composite Index slid below the 3,050-point plateau, and now investors are bracing for further decline on Monday with caution ahead of a series of corporate earnings this week.
The global forecast for the Asian markets is fairly pessimistic, due largely to weaker than expected data out of the United States that indicates a worldwide economic recovery might not be as close as many had thought. Technology shares could remain under pressure, while steel, oil and other commodities also may slide. The European and U.S. markets finished modestly lower on Friday, and now the Asian bourses are expected to continue to trend to the downside.
The SCI finished sharply lower on Friday, thanks to heavy losses among the financials and the property stocks.
For the day, the index plummeted 93.59 points or 2.98 percent to close at 3,046.97 after trading between 3,039.30 and 3,146.00 on turnover of 146.32 billion yuan. There were 798 decliners and 74 gainers, with 3 stocks finishing unchanged. The Shenzhen Index lost 3.58 percent to close at 1,022.92 points.
Among the decliners, China Pacific Insurance dropped 2.1 percent, while Ping An Insurance lost 2.23 percent, China Life Insurance Co shed 2.04 percent, Industrial & Commercial Bank of China slid 3.21 percent, Shanghai Pudong Development Bank fell 1.42 percent, China Construction Bank was down 1.32 percent, Bank of Communications dropped 3.64 percent, Gemdale Corporation eased 0.11 percent, Poly Real Estate Group lost 2.39 percent, Huaneng Power International shed 4.69 percent, Huadian International fell 3.99 percent and Shanghai Electric Group was off 4.55 percent.
The lead from Wall Street is firmly negative as stocks finished notably lower on Friday, although a late session rally helped to mitigate the pullback prompted by the day's disappointing economic data. The major averages all closed lower by hefty margins, with the day's retreat leading to a lower overall finish for the week.
The decline in equities came following the release of Reuters and the University of Michigan's preliminary report on consumer sentiment for the month of August, which showed that the consumer sentiment index unexpectedly decreased compared to the previous month. The consumer sentiment index fell to a reading of 63.2 in August from a reading of 66.0 in July. The decrease surprised economists, who had been expecting the index to increase to 69.0. Coupled with disappointing retail sales figures released earlier this week, the data indicated that the American consumer is still struggling, prompting the pullback by stocks.
Also on the economic front, the Federal Reserve revealed that industrial production in the month of July increased by more than economists had been anticipating, boosted by a jump in auto production. The data showed that industrial production increased by 0.5 percent in July after falling by 0.4 percent in June. With the increase, industrial production rose for the first time since December of 2007. Economists had been expecting a slightly more modest increase in industrial production of about 0.4 percent.
Earlier, traders looked to figures from the Labor Department showing that consumer prices were unchanged in the month of July, with decreases in food and energy prices offsetting higher prices for apparel and tobacco. The Labor Department said its consumer price index was unchanged in July after increasing by an unrevised 0.7 percent in June. The lack of growth in consumer prices came in line with the expectations of economists. Excluding the decreases in food and energy prices, the core consumer price index edged up 0.1 percent in July following a 0.2 percent increase in the previous month. Economists had expected the index to increase by 0.1 percent.
The major averages saw considerable upside heading into the close, offsetting some of their early losses. The Dow closed down by 76.79 points or 0.8 percent at 9,321.40, the NASDAQ fell by 23.83 points or 1.2 percent to 1985.52 and the S&P 500 slipped by 8.64 points or 0.9 percent to 1004.09. With the losses, the major averages all closed modestly lower for the week following four consecutive weekly gains. While the Dow fell 0.5 percent for the week, the NASDAQ and the S&P 500 posted weekly loses of 0.7 percent and 0.6 percent, respectively.
In corporate news, Chinese independent power producer Datang International Power Generation said Sunday that first-half net profit attributable to equity holders of the company amounted to about RMB722 million, up 53.04 percent from last year. Basic earnings per share attributable to equity holders of the company for the period came in at RMB0.0613, an increase of nearly RMB0.0211 per share from the prior year. Operating revenue increased 18.90 percent to about RMB 20,684 million.
Also, China Sky One Medical, announced that its second quarter net income was $9.5 million or $0.57 per share, compared to net income of $8.1 million, or $0.50 per share, in the second quarter of 2008. Operating income was $12.1 million for the second quarter of 2009, representing a 19.8 percent increase from $10.1 million in the second quarter of 2008. Revenues for the quarter were $32.18 million, compared to $23.75 million in the year ago quarter.
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