RTTNews - The China stock market on Monday ended the two-day losing streak in which it had shed 25 points or 0.9 percent along the way. The Shanghai Composite Index is close to regaining support at the 2,770-point plateau, but investors are instead preparing for a modest retreat at the opening of trade on Tuesday.
The global forecast for the Asian markets calls for a mild decline - more on inertia than anything else after a round of profit taking took hold on Monday. The lack of economic data or other stimuli may result in thin trade, which could exaggerate movement. The European markets ended sharply lower, and the U.S. bourses ended nearly unchanged, and the Asian markets are tipped to fall right in between with modest declines.
The SCI finished modestly higher on Monday, thanks to solid gains in the property sector and the financials.
For the day, the index gathered 14.45 points or 0.52 percent to close at 2,768.34 after trading between 2,729.03 and 2,795.15. The Shenzhen Index eased 55.36 points or 0.52 percent to finish at 10,611.75 for a combined turnover of 210 billion yuan.
Among the gainers, Wuhan Mayinglong Pharmaceutical Group and Wohua Pharmaceutical both advanced by the daily limit, while China Vanke added 4.70 percent, China Construction Bank was up 5.79 percent, China Minsheng Bank added 5.78 percent, Bank of China rose 5.15 percent, Hua Xia Bank rose 3.9 percent and Poly Real Estate climbed 3.0 percent.
The lead from Wall Street is virtually flat as stocks finished Monday's session little changed after traders went bargain hunting in the afternoon following a morning sell-off. The major averages finished on opposite sides of the unchanged line but only by minuscule margins. The lack of significant movement came as the day's session was marred by low volume and a lull in economic data. Traders did some profit taking early on but were enticed back into the market following some speculation about a near-term economic recovery.
In the news, the annual Apple Worldwide Developers Conference kicked off in San Francisco, with Apple (AAPL) announcing a new web browser, a remodeled MacBook and a fresh version of the iPhone. Also, Chrysler's sale of assets to Fiat was be delayed by the U.S Supreme Court. A group of Indiana pension funds have filed an emergency appeal with the court to block the sale.
Packaged food supplier General Mills (GIS) was also in focus after the company said it is on track to exceed its prior earnings targets for the fiscal year ending May 31, 2009 due to good operating performance and a lower fourth-quarter tax rate. The forecast, however, assumes no mark-to-market valuation as well as gains from asset sales. The company also provided its initial segmental sales outlook for 2010. The stock rose by 4.0 percent on the day, setting its best closing level in over three months.
The Federal Reserve continued its treasury buyback program Monday, completing the first of two quantitative easing moves for the week. The New York Fed purchased $7.50 billion worth of securities with maturity dates ranging from December of 2013 to April of 2016.
The day's buyback saw a total of $29.97 billion in treasuries submitted for the purchase. Overall, the Fed has purchased a total of $153.02 billion since the program began on March 25. Some speculation has risen as to whether the Fed will raise interest rates to combat the effects of expected inflation following its quantitative easing actions.
Meanwhile, President Barack Obama is ramping up the economic stimulus spending, pledging to create over 600,000 jobs this summer. Obama made the announcement Monday morning, stating that he will accelerate the implementation of the $787 billion stimulus in the next 100 days.
The major averages closed little changed after the day's losses were largely offset by a late session rally. While the Dow finished up by 1.36 or less than a tenth of a percent at 8,764.49, the NASDAQ dipped by 7.02 or 0.4 percent to 1842.40, and the S&P 500 fell 0.95 or 0.1 percent to 939.14.
In corporate news, China Eastern Airlines is likely to combine with Shanghai Airlines Co. in a stock swap merger, according to local media reports. The two state-controlled airlines have reportedly posted combined losses 16.5 billion yuan, prompting the government to bail them out. The stock swap deal is part of the government's efforts to eventually merge the two Shanghai-based airlines to create a stronger and more profitable carrier.
While the deal is yet to receive confirmation, Jinjiang International Holdings Co., which recently boosted its stake in Shanghai Airlines to 23.62 percent from 7.93 percent, will likely transfer 17.05 percent of the airline's stock to China Eastern Air Holding Co., China Eastern's parent.
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