The China stock market has closed lower now in two straight trading days, retreating almost 20 points or 0.9 percent along the way. The Shanghai Composite Index settled just above the 2,290-point plateau, and now traders are bracing for continued selling pressure.
The global forecast for the Asian markets is cautious following an unexpected interest rate cut from China, which raised some questions about the strength of the world's second largest economy. And in the U.S., the Labor Department reported a drop in initial jobless claims - but comments from Federal Reserve Chairman Ben Bernanke were disappointing as he made no explicit reference to further easing measures. The European markets were higher and the U.S. bourses were mixed, and the Asian markets are expected to follow the latter example.
The SCI finished modestly lower on Thursday following losses from the coal miners and the financial shares.
For the day, the index shed 16.42 points or 0.71 percent to finish at 2,293.13 after trading between 2,288.67 and 2,328.67 on volume of 59.65 billion yuan. The Shenzhen Composite Index lost 3.68 points or 0.4 percent to end at 931.83.
Among the decliners, Yanzhou Coal shed 1.4 percent, while Pingdingshan Tianan Coal lost 1.7 percent, Industrial and Commercial Bank of Chine eased 0.2 percent, Agricultural Bank of China dropped 0.4 percent and Bank of China eased 0.3 percent.
The lead from Wall Street suggests mild consolidation as stocks turned in a lackluster performance on Thursday after failing to sustain an early upward move. Notable selling pressure emerged in the final hour of trading, however, resulting in a mixed close for the markets.
The initial support was partly due to a positive reaction to a surprise interest rate cut by China's central bank. The move backed up recent optimism about further stimulus from the world's central banks, although it also raised some questions about the strength of the Chinese economy.
The markets also benefited from a report from the Labor Department showing a drop in initial jobless claims in the week ended June 2. But stocks pulled back well off their highs as Federal Reserve Chairman Ben Bernanke began to testify before the Joint Economic Committee in Washington.
Bernanke said that U.S. economic growth appears poised to continue at a moderate pace and suggested that last week's disappointing jobs report may have reflected temporary factors. While Bernanke said that Fed "remains prepared to take action" if the economic situation worsens, he made no explicit reference to further easing measures.
Meanwhile, traders largely shrugged off news that Fitch cut Spain's credit rating by three notches to BBB with a negative outlook.
The major averages ended the day on opposite sides of the unchanged line as the Dow climbed 46.17 points or 0.4 percent to finish at 12,460.96, while the NASDAQ fell 13.70 points or 0.5 percent to end at 2,831.02 and the S&P 500 edged down 0.14 points or less than a tenth of a percent to 1,314.99.
In economic news, China's central bank on Thursday unexpectedly cut benchmark interest rates by 25 basis points. The People's Bank of China reduced the rate by a quarter point to 6.31 percent, effective from June 8. The deposit rate was lowered to 3.25 percent from 3.5 percent. Earlier, China lowered the reserve requirement ratio 50 basis point in February after taking similar such move in December 2011.
by RTT Staff Writer
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