Asian Market Commentary
FONT-SIZE Plus   Neg
Share SHARE
mail  E-MAIL

Profit Taking May Dent China Stock Market

4/18/2012 8:50 PM ET

The China stock market on Wednesday wrote an emphatic finish to the two-day slide in which it had fallen more than 25 points or 1 percent. The Shanghai Composite finished just above the 2,380-point plateau, and now investors are predicting renewed consolidation at the opening of trade on Thursday.

The global forecast for the Asian markets suggests mild selling pressure as investors figure to take profits after hefty gains in the previous session, while some uninspired earnings news from Intel and IBM also may weigh on investors. Adding to the cautious sentiment, Spain's bad loans reached an 18-year high in February, the Bank of Spain said. About 8.16 percent of loans held by banks in February were non-performing, the highest since October 1994. The European and U.S. markets finished lower, and the Asian bourses are tipped to follow that lead.

The SCI finished sharply higher on Wednesday following gains from the property stocks, financials and resource plays.

For the day, the index surged 45.86 points or 1.96 percent to finish at 2,380.85 after trading between 2,337.86 and 2,383.64 on turnover of 93.12 billion yuan. The Shenzhen Component Index spiked 229.62 points or 2.33 percent to end at 10,069.53 on turnover of 82.98 billion yuan.

Among the gainers, Poly Real Estate jumped 4.73 percent, while Gemdale Corporation spiked 4.11 percent, China Vanke climbed 3.23 percent, Agricultural Bank of China collected 1.12 percent, Everbright Bank added 1.74 percent, Bank of China gathered 0.98 percent, Guangdong Jingyi Metal surged 3.84 percent, Sinopec rose 0.83 percent and PetroChina rose 1.02 percent.

Wall Street offers a negative lead as stocks moved moderately lower on Wednesday, giving back some ground after ending the previous session sharply higher. Lingering concerns about the financial situation in Europe may also have led to the profit taking despite Tuesday's successful Spanish bond auction.

Soft earnings news also contributed to the weakness, with shares of Intel (INTC) falling by 1.8 percent after the semiconductor giant reported its first quarter results. Intel reported first quarter earnings that exceeded estimates on revenues that came in line with expectations. However, the company also provided disappointing gross margin guidance.

Shares of IBM (IBM) also ended the day in the red after the tech giant reported better than expected than first quarter earnings but on weaker than expected sales.

Meanwhile, internet media giant Yahoo (YHOO) moved to the upside on the day after reporting first quarter earnings and revenues that exceeded analyst estimates.

The major averages saw some volatility in late-day trading but all finished the day in the red. The Dow fell 82.79 points or 0.6 percent to finish at 13,032.75, while the NASDAQ dipped 11.37 points or 0.4 percent to end at 3,031.45 and the S&P 500 slid 5.64 points or 0.4 percent to 1,385.14.

In economic news, the National Bureau of Statistics reported on Wednesday that of the 70 cities surveyed by NBS in March, 46 cities reported a fall in house prices on a month-on-month basis. In February, prices declined in 45 cities. Among the major cities, Beijing, Shanghai, Guangzhou and Shenzhen reported a month-on-month fall in prices of newly built homes, the report said.

On a year-on-year basis, prices fell in 38 cities in March compared to 27 in February. According to reports, March's year-on-year decline was the first such result since 2010, when the government introduced housing market curbs to prevent a property bubble.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

Market Analysis

comments powered by Disqus