One day after halting the seven-day winning streak in which it gathered nearly 230 points or 9 percent on its way to a fresh nine-month closing high, the China stock market turned right back to the upside again on Tuesday. The Shanghai Composite Index regained support at 2,600 points, but analysts predict that the market could slide right back below that level again on Wednesday.
The global forecast for the Asian markets is inconclusive, although some of the markets may experience a downside correction after a series of lengthy winning streaks. Technology shares may fall under pressure, as could the auto shares after weak corporate news. The European markets were mostly lower, as were the U.S. markets, and the Asian bourses are forecast to follow that lead.
The SCI finished sharply higher on Tuesday, boosted by some positive economic data. Properties ended higher, as did the commodities and steel shares. For the day, the index jumped 39.42 points or 1.49 percent to close at 2,618.17 after trading between 2,558.96 and 2,619.69 on turnover of 113.2 billion yuan. There were 792 gainers and 124 decliners.
Among the gainers, China Vanke gained 6.73 percent, while Baoshan Iron and Steel advanced 6.33 percent, Pingdingshan Tianan Coal Mining jumped 9.22 percent and Shenzhen Topraysolar rose 9.12 percent.
The lead from Wall Street is mixed as stocks showed some volatility over the course of the trading day on Tuesday, with the major averages having difficulty sustaining any significant moves before ending the session mixed. The choppy trading came as traders expressed some uncertainty about the outlook for the markets.
While stocks initially moved higher following the weakness that was seen in the previous session, buying interest waned not long after the open. The major averages subsequently pulled back off their highs for the session and into negative territory.
The pullback by the markets was partly due to concerns about the outlook for General Motors (GM), which moved sharply lower on the day to reach its lowest levels since the depression. The loss by GM came as traders worried that the company is on the verge of filing for bankruptcy after several company executives revealed that they sold their GM stock and liquidated their remaining direct holdings in the company.
Shares of rival Ford (F) also came under pressure after the automaker announced a public offering of 300 million shares of its common stock. Ford closed down 17.6 percent, pulling back further off the ten-month closing high it set last week. Selling pressure remained somewhat subdued, however, and stocks showed a notable move back to the upside in late day trading. The major averages all moved well off their worst levels of the day, with the Dow climbing firmly into positive territory.
In economic news, the Commerce Department released a report earlier in the day showing that the U.S. trade deficit for March came in wider than in the previous month, with the value of exports falling by more than the value of imports. While the report showed that the trade deficit widened to $27.6 billion in March from a revised $26.1 billion in February, economists had expected the deficit to widen to $29.0 billion.
Separately, a report from the Trustees for Medicare and Social Security showed that the funds that the programs rely on are being depleted at a faster rate than originally forecast. At the updated rate, Medicare's expenses will exceed taxpayer revenue in 2017, two years ahead of the earlier estimate, while Social Security's trust fund will be wiped out in 2037, four years ahead of the earlier estimate.
The major averages eventually ended the session mixed, with the Dow posting a moderate gain. While the Dow closed up 50.34 points or 0.6 percent at 8,469.11, the NASDAQ fell 15.32 points or 0.9 percent to 1,715.92 and the S&P 500 closed down 0.89 points or 0.1 percent at 908.35.
In economic news, China will on Wednesday release April figures for retail sales and industrial production. Sales are expected to climb 14.5 percent on year after the 14.7 percent annual expansion in March. Industrial output is called higher by 8.6 percent on year, up from 8.3 percent in the previous month.
Also, China posted a trade surplus of $75.43 billion for the period of January to April, the National Bureau of Statistics said on Tuesday. Exports were down 22.6 percent on year in April, the data showed - more than forecasts for an 18.4 percent annual decline. Through the first four months of the year, exports were off an annual 20.5 percent. On month, exports were up 6.9 percent.
Imports fell 23 percent on year in April, the NBS said, versus forecasts for a 22.0 percent decline. Imports were down an annual 28.7 percent through the first four months of the year. On month, imports were 15.1 percent higher.
Finally, urban fixed-asset investment in China jumped 30.5 percent on year through the first four months of the year, the National Bureau of Statistics said on Tuesday - slightly higher than analyst expectations for an annual increase of 29 percent. Investment in state-controlled projects jumped an annual 30.6 percent, while investment in central government projects was up 29.3 percent.
Coal exploration was up 36.6 percent on year, while electricity added 18 percent, natural gas exploration gained 10.1 percent, railway transportation gained 94.2 percent, non-metals were up 58.6 percent, ferrous metals added 4.7 percent and non-ferrous metals jumped 26.3 percent. Through the first three months of 2009, fixed-asset investment had risen 28.6 percent on year.
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