The China stock market on Tuesday lost just a handful of points, but that was enough to extend its losing streak to three sessions - costing it more than 60 points or 3 percent along the way. The Shanghai Composite Index continues to cling to support at 2,400 points, but analysts predict that the market will surrender that level at the opening of trade on Wednesday.
The global forecast for the Asian markets is fairly pessimistic as concerns over the spread of swine flu continue to weigh on investors. Some slightly better than expected economic data provides a bit of optimism, as does some mixed corporate news. The European markets ended sharply lower and the U.S. markets ended barely below the unchanged line, and the Asian markets are tipped to follow the latter lead.
The SCI finished barely lower on Tuesday, dragged to the downside by heavy losses among the travel and tourism stocks - while strong gains among the pharmaceuticals and coal producers limited the losses.
For the day, the index lost 3.91 points or 0.16 percent to close at 2,401.44 after trading between 2,372.34 and 2,411.44. The Shenzhen Index added 22.08 points or 0.24 percent to close at 9,082.22 points for a combined turnover of 137.42 billion yuan. Gainers outnumbered losers by 591 to 238 in Shanghai and 502 to208 in Shenzhen.
Among the decliners, China Eastern Airlines ended limit-down, while Shanghai Airlines dropped 4.8 percent, PetroChina retreated 2.22 percent, Sinopec dropped 2.38 percent, Ping An Insurance lost 3.39 percent, China Southern slumped 6.18 percent, Air China retreated 2.71 percent and China United Travel fell 3.37 percent.
Finishing higher, Gansu Jingyuan Coal Industry, Electricity Power Co, Shenzhen Neptune Bioengineering and Shanghai Pharmaceutical all were up by the daily 10 percent limit, while Industrial and Commercial Bank of China was up 0.5 percent, China Shenhua was up 0.8 percent and China Citic Bank gained 1.91 percent.
The lead from Wall Street is virtually flat with a touch of downside as stocks showed a lack of direction throughout the trading day on Tuesday after failing to sustain an initial downward move. The major averages bounced back and forth across the unchanged line before eventually ending the session modestly lower. The choppy trading came as traders digested mixed economic and corporate news combined with continued concerns that the swine flu outbreak may become a pandemic.
In economic news, the Conference Board released a report earlier in the day showing that its consumer confidence index increased by much more than expected in April, reflecting a significant improvement in consumers' assessment of the short-term outlook. The report showed that the consumer confidence index jumped to 39.2 in April from an upwardly revised 26.9 in March. Economists had expected the index to increase to 29.7 from the 26.0 originally reported for the previous month.
Separately, a report from Standard and Poor's showed that the S&P/Case-Shiller 20-City Composite Home Price Index fell at an annual rate of 18.6 percent in February, a modest deceleration from the 19.0 percent drop in prices that was reported for January.
In other news, the Wall Street Journal reported that regulators are pushing Bank of America (BAC) and Citigroup (C) to raise more capital following early results of the government's stress test analysis, generating some concerns about the results of the tests. The Journal said that the capital shortfall amounts to billions of dollars at Bank of America. The report specified that executives at both banks are objecting to the preliminary findings from the government's examination.
Meanwhile, an increase in the number of confirmed cases of swine flu has led the World Health Organization to raise the level of its influenza pandemic alert to Phase 4. At the same time, the WHO does not recommend that countries close borders or restrict travel.
The major averages moved to the downside in the latter part of the trading day, ending the session just below the unchanged line. The Dow closed down 8.05 points or 0.1 percent at 8,016.95, the NASDAQ closed down 5.60 points or 0.3 percent at 1,673.81 and the S&P 500 closed down 2.35 points or 0.3 percent at 855.16.
In corporate news, Bank of China saw first-quarter net profit fall 14.41 percent from a year ago on writedowns of sub-prime-related assets, the bank said on Tuesday. Net profit in the first three months stood at 18.57 billion yuan or 0.07 yuan per share, down from 21.7 billion yuan or 0.09 yuan a year earlier.
Also, China Citic Bank saw income grow 60.7 percent on year to 13.3 billion yuan in 2008, the bank said on Tuesday. Business income was up 44.3 percent on year earlier to 40.16 billion yuan in 2008, while the returns of net assets increased 0.54 percentages points to 14.84 percent.
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