RTTNews - The China stock market on Tuesday saw an end to the winning streak that had reached three sessions, collecting more than 215 points or 7 percent in that time. The Shanghai Composite Index remained above the 2,900-point plateau, and now investors are looking for mild moves to the upside when the market opens for business on Wednesday.
The Asian markets are dealt a cautiously optimistic lead from the global forecast after most stocks in the region finished lower in the previous session. Airlines and housing stocks are expected to support the markets, while the financials, properties and gold miners also are predicted to rebound - but oil stocks may fall under pressure on the declining price of crude oil. The European and U.S. markets finished with mild gains and the Asian bourse are also tipped to move modestly to the upside.
The SCI finished sharply lower on Tuesday, thanks to major losses among the financials, steel stocks and miners.
For the day, the index plunged 77.63 points or 2.59 percent to close at 2,915.80 after trading between 2,823.637 and 2,980.10. The Shenzhen Index dropped 387.62 points or 3.21 percent to finish at 11,688.17 for a combined turnover of 249.13 billion yuan. Decliners outnumbered gainers by 636 to 232 in Shanghai and 583 to 214 in Shenzhen.
Among the decliners, China Bank of Communications dropped 6.17 percent, while China Construction Bank shed 4.33 percent, Aluminum Corp of China (Chalco) lost 2.89 percent and Jiangxi Copper fell 5.66 percent.
The lead from Wall Street is mildly positive as stocks finished modestly higher on Tuesday, as the day's positive economic reports and news of Ben Bernanke's reappointment generated some upbeat sentiment on Wall Street. The major averages all finished in positive territory by slim margins, well off their best levels of the day.
Buying interest was largely sparked by the day's economic data, with a report from the Conference Board showing that consumer confidence rebounded significantly in the month of August after seeing some deterioration in July. The consumer confidence index jumped to 54.1 in August from an upwardly revised 47.4 in July. Economists had been expecting the index to increase to 47.9 from the 46.6 originally reported for the previous month.
Separately, Standard and Poor's revealed that the S&P/Case-Shiller 20-City Composite Home Price Index fell at an annual rate of 15.4 percent in June compared to a revised 17 percent drop in May. Economists had expected prices to fall 16.4 percent compared to the same month a year ago.
In other news, President Barack Obama officially nominated Ben Bernanke for a second term as Federal Reserve Chairman this morning, with the president praising the manner in which the Fed Chief handled the recent financial crisis.
Meanwhile, both the White House and the Congressional Budget Office released new projections of near-record budget deficits totaling roughly $1.58 trillion for 2009. That level of deficit, a combination of increased government spending and plummeting tax revenues due to the recession, will ring in at 11.2 percent of the country's gross domestic product, the highest deficit since World War II, according to both analyses.
The major averages saw choppy movement in late session trading, holding onto modest gains. The Dow closed up 30.01 points or 0.3 percent at 9,539.29, the NASDAQ closed up 6.25 points or 0.3 percent at 2,024.23 and the S&P 500 closed up 2.43 points or 0.2 percent at 1,028.00.
In corporate news, China Life saw first-half earnings of 18.2 billion yuan compared with 15.8 billion yuan a year earlier, the company said on Tuesday. That was well below a market consensus of 22.8 billion yuan, as a large decline in dividend income caused net investment income to drop 25 percent to 18.9 billion yuan. Second-quarter profit rose about 17 percent to 8.53 billion yuan, the data showed.
Also, China Security & Surveillance Technology, Inc said it entered into definitive agreements with certain investors to sell in a registered direct offering 4.056 million shares of its common stock at a price at $6.25 per share, aggregating to gross proceeds of $25.35 million, before deducting agent fees and expenses. Additionally, the company issued the investors warrants to purchase 1.014 million shares of common stock at a price of $8.62 per share for a term of one year.
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