The China stock market on Monday snapped the modest two-day losing streak that had cost it more than 30 points or 1.2 percent in the process. The Shanghai Composite Index broke through resistance at 2,550 points, but analysts are predicting a significant decline at the opening of trade on Tuesday - perhaps testing support at 2,500 points.
The global forecast for the Asian markets is sharply negative after disturbing earnings news from Bank of America, which is expected to put financial stocks under heavy pressure throughout the region. The price of crude oil also plummeted overnight, which could put the heat on many of the resource stocks. The European and U.S. markets all suffered heavy losses across the board, and the Asian bourses are expecting a similar fate.
The SCI finished sharply higher on Monday, boosted by gains among the financials, airlines, commodities and ship builders.
For the day, the index surged 53.52 points or 2.14 percent to close at 2,557.46 after trading between 2,497.321 and 2,559.036. The Shenzhen Index added 213.58 points or 2.23 percent to close at 9,793.64 for a combined turnover of 222 billion yuan. Gainers outnumbered decliners by 731 to 61 in Shanghai and 625 to 54 in Shenzhen.
Among the gainers, Jiangxi Changyun soared 9.98 percent, while China Shipping Development added 8.54 percent, China COSCO Holdings Company Limited gained 6.14 percent, Industrial & Commercial Bank of China added 1.2 percent, China Construction Bank was up 1.3 percent, Pudong Development Bank rose 2.3 percent, Air China gained 8.64 percent and China Southern Airlines jumped 5.9 percent.
The lead from Wall Street is broadly pessimistic as stocks moved sharply lower over the course of the trading day on Monday, with the major averages giving back some ground after closing higher for six straight weeks. A negative reaction to the latest earnings news inspired traders to do some profit taking.
Bank of America released its first-quarter results before the market open. While the company posted a better earnings figure than analysts had expected, a significant increase in loan loss protection made investors wary of holding onto the stock.
On the economic front, the Conference Board said its leading economic index fell 0.3 percent in March following a revised 0.2 percent decrease in February. The agency noted that the index has not risen in the past nine months.
In merger news, Sun Microsystems (JAVA) agreed to be acquired by Oracle (ORCL) for $9.50 per share in cash. The offer represents a 42 percent premium to Sun's closing price on Friday. Oracle expects the acquisition to be accretive to its earnings by at least $0.15 per share on a non-GAAP basis in the first full year after closing.
Additionally, Pepsi Bottling Group (PBG) and PepsiAmericas (PAS) showed strong upward moves after PepsiCo (PEP) offered to acquire both bottlers for about $6 billion.
Also, with the price of crude oil showing a steep decline, closing down $4.45 at $45.88 a barrel, the oil services sector saw substantial weakness. Reflecting the weakness in the sector, the Philadelphia Oil Services Index closed down 6.7 percent.
The major averages saw some further downside in the latter part of the trading day, ending the session near their worst levels of the day. The Dow closed down 289.60 points or 3.6 percent at 7,841.73, the NASDAQ closed down 64.86 points or 3.9 at 1,608.21 and the S&P 500 closed down 37.21 points or 4.3 percent at 832.39.
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