RTTNews - One day after ending the four-day slide that had cost it more than 220 points or 6.3 percent, the China stock market headed right back to the downside on Wednesday. The Shanghai Composite Index crashed below the 3,120-point plateau, although investors are hopeful that the market will trend back to the upside when it opens for business on Thursday.
The global forecast for the Asian markets is firmly positive, thanks largely to encouraging commentary from the U.S. Federal Reserve after it decided to keep interest rates on hold. Housing and airline stocks are primed for a rebound in Thursday's trade, along with steel and telecom shares. The European and U.S. markets all finished with solid gains, and the Asian bourses also are expected to track higher on Thursday.
The SCI finished sharply lower on Wednesday, with losses across the board - although commodities and financials were especially hard hit.
For the day, the index plummeted 152.01 points or 4.7 percent to finish at 3,112.72 after trading between 3,104.56 and 3,255.99. The Shenzhen Index lost 48.28 points or 4.4 percent to end at 1,052.51.
Among the decliners, Yunnan Aluminum fell by the 10 percent daily limit, while Jiangxi Copper was down 7.4 percent, China Shenhua Energy dropped 5.9 percent and Datong Coal Energy shed 5.0 percent.
The lead from Wall Street is broadly optimistic as stocks saw a strong outing on Wednesday, with trader expectations largely confirmed by the Federal Reserve. The major averages all closed in positive territory by substantial margins, posting their first positive session of the week after the previous two days were slowed by profit taking.
The Federal Open Market Committee, the policy-making arm of the Federal Reserve, announced Wednesday that it was maintaining the target range for its benchmark federal funds rate at zero to 0.25 percent. The Fed also repeated its belief that low rates will persist for what it calls an extended period. The central bank added that economic activity is leveling out.
The central bank also said it will gradually slow the pace of treasury purchases and expects that the full amount of $300 billion will be purchased by the end of October. Going into the meeting, the Fed was universally expected to leave rates unchanged, but there was some speculation that the central bank could announce the end of its program to buy treasury bonds, a move it had undertaken to further stimulate the economy.
Earlier, traders largely shrugged off a report from the Commerce Department showing that the U.S. trade deficit widened in the month of June compared to the previous month. The deficit for the month still came in narrower than economists had been anticipating. The report revealed that the trade deficit widened to $27.0 billion in June from $26.0 billion in May, with imports increasing at a faster pace than exports. Economists had been expecting a somewhat more significant increase in the size of the deficit to $28.7 billion.
The major averages saw a late session rally stall but still finished with notable gains. The Dow jumped by 120.16 points or 1.3 percent to 9,361.61, the NASDAQ climbed by 28.99 points or 1.5 percent to 1,998.72 and the S&P 500 rose by 11.46 points or 1.2 percent to 1,005.81.
In corporate news, steering components supplier China Automotive Systems, Inc., (CAAS: News ) reported Wednesday an increase in second-quarter profit, helped chiefly by a 45.3 percent rise in sales of steering products for passenger and light-duty vehicles. The company also lifted its previous revenue outlook for the full year.
For the second quarter, net income attributable to common shareholders rose to US$6.07 million or US$0.21 per share from US$4.74 million or US$0.18 per share in the previous year. Net income grew to $8.73 million from $6.43 million.
Also, transportation information services and solutions provider China TransInfo Technology Corp. reported that net income increased by 29.9 percent year-over-year to $2.89 million or $0.13 per share from $2.28 million or $0.11 per share last year. Income from operations increased to $2.85 million from $2.28 million for the same quarter last year.
Revenues increased 87 percent to $9.58 million from $5.13 million for the same quarter last year. The increase was primarily due to stronger sales of products and applications in the transportation segment, the company said.
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