RTTNews - The China stock market has stretched its winning streak to five sessions now, surging more than 220 points or 6.3 percent en route to a fresh 14-month closing high. The Shanghai Composite Index remained above the 3,430-point plateau, although analysts warn that the market could experience some heavy selling pressure on Wednesday - perhaps dipping back below 3,400 points.
The global forecast for the Asian markets is finally downbeat and could signal the end of several lengthy winning streaks in the region. Weakness among the commodity stocks is expected to weight heavily, while steel producers and technology shares could also ease on profit taking. The European markets ended firmly in the red and the U.S. markets also were mostly lower, and the Asian markets also are expected to move to the downside.
The SCI finished barely higher on Tuesday, as weakness among the financials wiped out much of the solid gains in the steel sector.
For the day, the index was up 3.16 points or 0.1 percent to close at 3,438.37 after trading between 3,392.43 and 3,439.92. The Shenzhen Index was up 1.1 percent to 1,138.52.
Among the actives, Anshang Steel and Xinjiang Goldwind Sci & Tech both were up by the daily limit of 10 percent, while Baoshan Iron & Steel surged 8.7 percent, Shenzhen Topraysolar added 5.8 percent, Bank of China eased 0.2 percent, Industrial & Commercial Bank of China gained 0.2 percent and China Construction Bank was flat.
The lead from Wall Street is mildly negative as stocks closed Tuesday's session on a mixed note in reaction to the day's varied earnings and economic reports following a choppy trading session. The major averages closed on opposite sides of the unchanged mark, with the tech-heavy NASDAQ posting a modest gain.
On the economic front, consumer confidence deteriorated by more than expected in the month of July, according to a report released by the Conference Board this morning. The decrease reflected less favorable assessments of both current conditions and the near-term outlook. The Conference Board said that its consumer confidence index fell to 46.6 in July from an unrevised 49.3 in June. Economists had been expecting a much more modest decline by the index to a reading of about 49.0.
Also, the Standard and Poor's /Case-Shiller 20-City Composite Home Price Index fell at an annual rate of 17.1 percent in May compared to the 18.1 percent decrease reported for April. Economists had expected the report to show that prices fell 17.9 percent year-over-year. On a monthly basis, S&P said that 13 of the 20 metro areas reported positive returns, contributing to the first monthly increase by the 20-city composite since the summer of 2006. The 20-city composite index rose 0.5 percent for the month.
In earnings news, Valero Energy (VLO), Amgen (AMGN) and Manitowoc (MTW) reported earnings that beat analyst estimates. On the other hand, Office Depot (ODP) fell well short of analyst forecasts. Meanwhile, IBM Corp. (IBM) announced that it has entered into a definitive agreement to acquire SPSS Inc. (SPSS). The all-cash transaction has a price of $50 per share, resulting in a total cash consideration of approximately $1.2 billion.
The major averages saw further choppy movement to close out another low volume session. While the NASDAQ closed up by 7.62 points or 0.4 percent at 1,975.51, the Dow fell by 11.79 points or 0.1 percent to 9,096.72 and the S&P 500 slipped by 2.56 points or 0.3 percent to 979.62.
In economic news, China will cut gasoline and diesel prices by 220 yuan per ton from Wednesday, the National Development and Reform Commission announced on Tuesday. This follows two big increases in June, which took prices to a record high.
After the cut, retail prices of gasoline will drop by about 0.16 yuan per liter. Diesel prices would be lower by about 0.19 yuan per liter. According to the government, the price cut was in response to recent decreases in global crude prices. The Xinhua News Agency reported that this is the sixth fuel price adjustment since the country adopted a new fuel pricing mechanism since the beginning of this year.
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