RTTNews - The China stock market on Tuesday saw an end to the brutal three-day losing streak in which it had plunged almost 300 points or 10.5 percent on its way to a three-month closing low. The Shanghai Composite Index regained support at the 2,680-point plateau, although now investors are anticipating a return to the downside when the market kicks off trade on Wednesday.
The global forecast suggests that the Asian markets will open under some pressure, with weakness expected particularly from the financial, property and airline sectors. Commodities also may wilt, thanks to a sharp decline in the price of crude oil. The European and U.S. markets all finished sharply lower, and the Asian bourses also are tipped to move firmly to the downside.
The SCI finished modestly higher on Tuesday, thanks to a rebound among the property stocks, financials and oil producers.
For the day, the index picked up 15.98 points or 0.6 percent to close at 2,683.72 after trading between 2,639.76 and 2,727.08. The Shenzhen Index was up 29.2 points or 0.28 percent to finish at 10,614.28 for a combined turnover of 161.03 billion yuan.
Among the gainers, Industrial and Commercial Bank of China gained 2.01 percent, while Bank of Nanjing surged 4.83 percent, China Vanke climbed 5.21 percent and Gemdale Corporation added 4.54 percent.
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The lead from Wall Street is broadly negative as stocks saw substantial weakness on Tuesday, when traders saw the day's positive economic news as already priced into the market. The major averages all moved sharply lower, adding to the losses posted in the previous session.
This morning, the Institute for Supply Management released a report showing that its manufacturing index jumped to 52.9 in August from 48.9 in July, with a reading above 50 indicating an expansion in the sector. With the increase, the index rose to its highest level since June of 2007. On average, economists had been expecting a more modest increase by the index to a reading of 50.2, which would have still indicated modest growth in the sector.
Separately, pending home sales increased by much more than expected in the month of July, according to a report released by the National Association of Realtors. The report showed that the pending home sales index rose 3.2 percent to 97.6 in July from a reading of 94.6 in June. The increase, which exceeded economist estimates of 1.5 percent growth, lifted the index to its highest level since June of 2007.
Meanwhile, the Commerce Department released a report showing that construction spending fell 0.2 percent in July following a downwardly revised 0.1 percent increase in June. Economists had expected spending to fall 0.2 percent compared to the 0.3 percent increase originally reported for the previous month.
In corporate news, online auction giant eBay (EBAY) announced that it has signed an agreement to sell its Skype communications unit for about $1.9 billion in cash and a $125 million note.
The major averages ended the session firmly in negative territory, just off their worst levels of the day. The Dow fell by 185.68 points or 2 percent to 9,310.60, the NASDAQ declined by 40.17 points or 2 percent to 1,968.89 and the S&P 500 fell by 22.58 points or 2.2 percent to close at 998.04.
In economic news, an index measuring manufacturing activity in China ticked higher to a score of 54.0 in August, the China Federation of Logistics and Purchasing said on Tuesday. That was higher than analyst expectations for a score of 53.5 following the 53.3 reading in July.
Nine of the 11 categories that comprise the index saw gains, while one was lower and the new exports component remained unchanged at 52.1. The index has remained above the boom-or-bust level of 50 points for the sixth consecutive month. A score over 50 indicates expansion, while a reading under 50 signifies contraction.
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