The China stock market has ended lower now in four straight sessions, plummeting more than 90 points or 4 percent en route to a six-month closing low. The Shanghai Composite Index settled just below the 2,225-point plateau, and now investors are bracing for continued selling pressure when the market opens on Tuesday.
The global forecast for the Asian markets remains negative on lingering concerns about the ongoing European debt crisis. Spain has now formally asked for a bailout to shore up its ailing banking sector, and it was quickly followed by a similar request from Cyprus. In addition, Moody's downgraded 28 Spanish banks - although better than expected economic data from the U.S. may provide support. The European and U.S. markets finished sharply mower, and the Asian bourses are also expected to open in the red.
The SCI finished sharply lower on Monday following losses from the property stocks and metal companies.
For the day, the index plunged 36.76 points or 1.63 percent to finish at 2,224.11 after trading between 2,223.05 and 2,253.51. The Shenzhen Composite Index dropped 2.5 percent to end at 919.40.
Among the decliners, China Vanke shed 3.1 percent, while China Merchants Property Development plummeted 5.8 percent, Poly Real Estate dropped 4.9 percent, Jiangxi Copper fell 3.9 percent, Chalco lost 2.1 percent and Zijin Mining Group retreated 2.5 percent.
The lead from Wall Street suggests continued consolidation as stocks moved sharply lower during trading on Monday after seeing considerable volatility last week. Lingering concerns about the ongoing European debt crisis weighed on the markets amid worries about the impact on the global economy.
The sell-off came as traders kept a close eye on the latest developments in Europe, where Spain formally asked for a bailout to shore up its ailing banking sector. Europe is likely to remain in focus throughout the week, as European leaders are due to hold a summit to discuss the ongoing debt crisis on Thursday and Friday.
Meanwhile, traders largely shrugged off a report from the Commerce Department showing a bigger than expected increase in U.S. new home sales.
The report showed sales of new single-family homes at a seasonally adjusted annual rate of 369,000 in May, a 7.6 percent increase from the revised April rate of 343,000. Economists had expected new home sales to climb to 350,000. With the much bigger than expected increase, new home sales in May came in at their highest level since April of 2010.
After moving sharply lower in early trading, the major averages remained stuck firmly in the red throughout the session. The Dow fell 138.12 points or 1.1 percent to finish at 12,502.66, while the NASDAQ tumbled 56.26 points or 2 percent to end at 2,836.16 and the S&P 500 slid 21.30 points or 1.6 percent to 1,313.72.
by RTT Staff Writer
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