RTTNews - One day after halting the three-day losing streak in which it had lost nearly 80 points or 3 percent, the China stock market turned right back to the downside again on Tuesday. The Shanghai Composite Index slid back beneath the 2,600-point plateau one day after regaining it, but now investors are optimistic that the market will resume its upward climb in Wednesday's trade ahead of the long weekend for Dragon Boat Festival.
The global forecast for the Asian markets is cautiously optimistic, although the positive sentiment could be damaged by the test-firing of another missile on Wednesday morning by North Korea. The markets get a boost from better than expected economic data out of the United States, and retailers also are forecast to trade higher. The European markets finished mostly higher and the U.S. markets ended sharply higher - and the Asian bourses are also tipped to trade in the green.
The SCI finished modestly lower on Tuesday, thanks to heavy selling pressure among the coal stocks. Financials also ended lower, as did the property stocks.
For the day, the index lost 21.44 points or 0.82 percent to close at 2,588.57 after trading between 2,585.91 and 2,618.80. The Shenzhen Index fell 0.4 percent to 877.30.
Among the decliners, China Shenhua Energy fell 3.3 percent, while China Coal dropped 4.2 percent, Datong Coal lost 6.6 percent, China Vanke fell 3.01 percent, Gemdale Corp. slumped 5.2 percent, Poly Real Estate declined 2.54 percent, Industrial and Commercial Bank of China declined 0.7 percent, Bank of China slid 0.85 percent, China Construction Bank was down 0.89 percent, PetroChina fell 0.08 percent and Sinopec was down 1.55 percent.
The lead from Wall Street is broadly positive as stocks staged a substantial rally over the course of the trading day on Tuesday after seeing some initial weakness, snapping a four-day losing streak. The major averages finished near their best levels of the day, bolstered by some positive news on the health of the U.S. consumer.
The Conference Board's reading on consumer confidence for May improved by far more than expected, reaching its highest level since September. The data generated some optimism about the outlook for consumer spending, which accounts for nearly two-thirds of economic activity. The consumer confidence figure helped to bolster some of the day's risk appetite, as reflected by the surge in equities following the release of the report.
Earlier in the day, disappointing housing price data contributed to the initial weakness. Traders largely shrugged off the data, however, citing the lagging nature of the numbers and choosing to focus on the encouraging consumer confidence data.
Retail stocks enjoyed a considerable run-up on the day, benefiting from the better than expected consumer confidence data. The S&P Retail Index closed up 4 percent, although it remains well off the seven-month highs that it set earlier this month.
The major averages moved roughly sideways in the second half of the day, holding onto strong gains. The Dow closed up 196.17 points or 2.4 percent at 8,473.49, the NASDAQ rose 58.42 points or 3.5 percent to 1,750.43 and the S&P 500 closed up 23.33 points or 2.6 percent at 910.33.
In economic news, China is planning a stimulus package of $440 billion on expanding using renewable energy, state media said, as the highly energy-hungry coal-dependent country seeks to rely more on cleaner energy solutions to power its growth.
An official said the government solicited views from local economic planning agencies and relevant companies about the draft plan that would more than treble a goal of 30 gigawatts announced in 2007 in a renewable energy development plan to touch over 100 gigawatts by 2020.
In corporate news, China Finance Online Co. Ltd said on Tuesday it slipped to a loss from the same quarter a year ago, hurt by an increase in expenses. Revenues and gross margin for the first quarter, however, increased from the same quarter a year ago. For the first quarter, GAAP net loss attributable to the company was $128 thousand or $0.01 per ADS, compared to net income of $3.509 million or $0.15 per ADS in the same quarter a year ago.
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