The China stock market has ended lower now in back-to-back sessions, giving up nearly 60 points or 2.7 percent in the process. The Shanghai Composite Index is clinging to support at 2,400 points, and now analysts are projecting that the market will slide through that level of support as well at the opening of trade on Tuesday.
The global forecast for the Asian markets is wrought with uncertainty as investors are increasingly nervous over the spread of swine flu, with travel and tourism stocks expected to remain under pressure - although pharmaceuticals are likely to continue to outperform. Some mixed news out of the corporate world adds to the overall negative sentiment. The European markets ended mixed but near the unchanged line, while the U.S. markets were solidly in the red - and the Asian bourses are tipped for little movement with a touch of downside.
The SCI finished sharply lower on Monday, as the properties, financials, agricultural stocks and airlines fell under heavy selling pressure - although the losses were limited by gains among the pharmaceuticals.
For the day, the index lost 43.25 points or 1.77 percent to close at 2,405.35 after trading between 2,393.16 and 2,452.93. The Shenzhen Index lost 232.99 points or 2.5 percent to finish at 9,082.22 points for a combined turnover of 155.41 billion yuan. Decliners beat gainers 754 to 101 in Shanghai and 641 to 92 in Shenzhen.
Among the decliners, Hunan New Wellful Co. slid by the daily limit of 10 percent, while China Pacific Insurance lost 7 percent, China CSSC Holdings slid 6.96 percent, Sichuan New Hope Agribusiness Co. lost 7.74 percent, Hainan Airlines slumped 9.95 percent, China United Travel slid 9.7 percent, Air China fell 6.2 percent, China Southern Airlines was down 6.1 percent, China Vanke fell 1.0 percent and Poly Real Estate was down 3.5 percent.
Finishing higher, Inner Mongolia Jinyu Group advanced by the daily limit of 10 percent, while Shanghai Pharmaceutical Co. rose 6.56 percent, China Unicom added 7 percent, PetroChina rose 1.21 percent, Sinopec edged up 0.62 percent and Shanghai Industrial Pharmaceutical Investment was up 4.5 percent.
Wall Street offers a negative lead as stocks ultimately closed well below the unchanged line after seeing some uncertainty for most of Monday's trading session. The lower close came as traders expressed concerns about the economic impact of the swine flu outbreak
Analysts say that traders used the swine flu scare as an excuse to take some money off the table, but a full blown epidemic could lead to a 10 to 15 percent correction. Although the flu does seem to be spreading, many doctors agree that the swine flu is no more panic worthy than any other breakout of the human flu during flu season. President Barack Obama said Monday that the spreading swine flu is something that should raise the country's state of alert but should not be seen as a cause for alarm.
On the corporate front, Verizon (VZ) reported first quarter net income of $0.58 per share, compared to $0.57 per share in the year-ago period. Excluding special items, net income attributable to Verizon was $0.63 per share, compared to $0.61 per share in same quarter last year. On average, analysts expected the company to report earnings of $0.59 per share.
Meanwhile, Whirlpool Corp. (WHR) reported first quarter earnings of $0.91 per share, compared to $1.22 in the prior year quarter. The company reported net sales of $3.57 billion, down from $4.61 billion in the year-ago period.
In other news, auto giant General Motors (GM) said that it will cut 21,000 hourly jobs and reduce its U.S. dealer count by 42 percent by the end of 2010 under a revised viability plan. The company also plans to phase out its Pontiac brand and focus on its four core brands in the U.S.
The major averages all ended the day firmly in negative territory, although well off their lows for the session. The Dow closed down 51.29 points or 0.6 percent at 8,025.00, the NASDAQ closed down 14.88 points or 0.9 percent at 1,679.41 and the S&P 500 closed down 8.72 points or 1.0 percent at 857.51.
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