RTTNews - The China stock market on Thursday wrote a finish to the three-day winning streak in which it had added nearly 65 points or 2.4 percent along the way. The Shanghai Composite Index fell back below support at the 2,800-point plateau, although analysts predict that the market could reclaim that level at the opening of trade on Friday.
The global forecast for the Asian markets is cautiously optimistic, thanks to some better than expected economic news out of the United States. Commodities will continue to find support on the rising cost of crude oil - although the importers may see some pressure as a result. The European markets ended modestly higher, as did the U.S. markets - and the Asian bourses are predicted to do the same.
The SCI finished modestly lower on Thursday, thanks to selling pressure among the airlines and the steel companies. For the day, the index retreated 18.93 points or 0.7 percent to close at 2,797.32 after trading between 2,787.45 and 2,828.74. The Shenzhen Composite Index fell 1.0 percent to 922.62.
Among the decliners, Air China fell 3.9 percent, while China Southern Airlines shed 3.5 percent, Baoshan Iron & Steel dropped 1.3 percent and Wuhan Iron & Steel declined 2.3 percent.
The lead from Wall Street is mildly positive as stocks were boosted higher on Thursday by trader reaction to the results of the thirty-year bond auction following a strong start on the heels of some encouraging economic data. The major averages ended the day well off their highs, however, giving back some ground in late day trading.
Stocks showed a notable upward move in afternoon trading as traders digested the results of the Treasury Department's auction of $11.0 billion worth of thirty-year bonds. The sale drew a high-yield of 4.72 percent, its highest level since August of 2007 but below estimates of 4.80 percent. The auction also attracted strong demand, with the bid-to-cover ratio coming in at 2.68. The sale of government-backed debt enjoyed strong interest from foreign financial entities seeking to bolster their positions in guaranteed returns.
On the economic front, a Commerce Department report showed that retail sales rose 0.5 percent in May following a revised 0.2 percent decrease in April. Economists had expected sales to increase by 0.5 percent compared to the 0.4 percent decrease originally reported for the previous month. A considerable increase in sales by gas stations contributed to the retail sales growth, with gas station sales jumping 3.6 percent in May after slipping 0.8 percent in April. Excluding the increase in sales by gas station, retail sales showed a much more modest increase of 0.2 percent.
Separately, the U.S. Labor Department revealed that initial jobless claims, a closely watched gauge of layoffs, came in at 601,000 for the week ended at June 6th. This was down 24,000 from the previous week's revised level of 625,000. However, continuing claims, which measure the number of people receiving ongoing unemployment help, rose to 6.816 million in the week ended May 30th. Due to an upward revision to the previous week's figure, continuing claims rose to a new record high for the 19th consecutive week.
In other news, the House Oversight and Government Reform Committee hosted former Bank of America CEO Ken Lewis as part of a growing investigation into whether government officials pressured the bank to withhold details about the purchase of Merrill Lynch from investors despite ballooning losses at the brokerage firm. While Lewis told the committee that the alleged threats from federal officials to take drastic actions if Bank of America backed out of the deal influenced his decision, he said they were not the deciding factor.
The major averages ended the session moderately higher, although well off their best levels of the day. The Dow closed up 31.90 points or 0.4 percent at 8,770.92, the NASDAQ closed up 9.29 points or 0.5 percent at 1,862.37 and the S&P 500 closed up 5.74 points or 0.6 percent at 944.89.
In economic news, China will on Friday announce May figures for industrial production and retail sales. Output is expected to gain 7.7 percent on year after the 7.3 percent annual expansion in April. Retail sales are seen higher by 15 percent on year after the 14.8 percent gain on year in the previous month.
Also, China posted a trade surplus of $13.39 billion in May, the General Administration of Customs said on Thursday, below expectations for a surplus of $14.9 billion. Imports were $75.37 billion in May, down 25.2 percent on year. Exports came in at $88.76 billion, down an annual 26.4 percent and falling for the seventh consecutive month.
For the period of January through May, the trade balance was $88.79 billion, down 21.8 percent on year. Imports were $337.35 billion, down 28 percent on year, while exports came in at $426.1 billion, down an annual 21.8 percent. Seasonally adjusted, imports were up 4.4 percent on month, while exports added 0.2 percent on month.
Finally, the National Bureau of Statistics said that China's fixed asset investment in urban areas jumped 32.9 percent on year for the period of January to May. Analysts had been expecting an increase of 31 percent after FAI was up an annual 30.5 percent for the period of January through April.
Real estate investment was up 6.8 percent in the first five months of the year, the data showed, while investment in central government projects jumped 28 percent on year and investment in state projects jumped an annual 33.4 percent.
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