The China stock market has closed lower now in two straight sessions, falling more than 40 points or 2 percent in the process. The Shanghai Composite Index finished just above the 2,140-point plateau, and now traders are bracing for further damage when the market opens on Tuesday.
The global forecast for the Asian markets remains broadly negative thanks to increasing concerns over Europe, although the losses may be pared by bargain hunting following the heavy damage suffered in the previous session. Spain announced a ban on short sales of stocks for three months, while Italy banned short sales of stocks in the financial sector for one week. The European and U.S. markets were sharply lower, and the Asian bourses are tipped to open in the red again.
The SCI finished sharply lower on Monday following losses from the property stocks and brokerages.
For the day, the index dropped 27.24 points or 1.26 percent to finish at 2,141.40 after trading between 2,135.56 and 2,154.17. The Shenzhen Composite Index lost 1.0 percent to end at 886.47.
Among the decliners, China Vanke lost 1.0 percent, while Gemdale eased 0.2 percent, Shanghai Xinmei plunged 5.0 percent, Everbright Securities shed 1.6 percent, Haitong Securities fell 1.2 percent and Citic Securities dropped 4.1 percent.
The lead from Wall Street remains brutal as stocks regained some ground over the course of the session after moving sharply lower at the start of trading on Monday, but still ended the day firmly in the red. The sell-off came as worries about the ongoing European debt crisis resurfaced amid indications that Spain may require a full bailout.
Contributing to the worries about Spain, the country's central bank said Spanish GDP fell by 0.4 percent in the second quarter following a 0.3 percent contraction in the first quarter.
Traders also expressed concerns about developments in Greece, with officials from the country's troika of international creditors due to visit Athens on Tuesday to review the progress Greece has made with respect to enacting reforms and austerity measures. The International Monetary Fund reportedly does not want to provide Greece with any additional financing.
The focus on Europe came amid a lack of major U.S. economic data. Nonetheless, some traders used the initial weakness on Wall Street as an opportunity to pick up stocks at reduced levels, contributing to the recovery attempt by the broader markets.
Among individual stocks, shares of McDonald's (MCD) came under pressure after the fast food giant reported second quarter earnings that fell year-over-year. McDonald's fell by 2.9 percent, pulling back further off last Thursday's two-month closing high.
The major averages moved roughly sideways going into the close of trading, stuck firmly in negative territory. The Dow fell 101.11 points or 0.8 percent to finish at 12,721.46, while the NASDAQ slid 35.15 points or 1.2 percent to end at 2,890.15 and the S&P 500 dropped 12.14 points or 0.9 percent to 1,350.52.
In economic news, China is on Tuesday scheduled to release the July score for the HSBC Flash Manufacturing PMI. The index saw a score of 48.2 in June. China also will see the June results of the Conference Board's leading and coincident indexes; they were up 1.1 percent and 0.8 percent in May, respectively.
In corporate news, Chinese oil and gas major CNOOC on Monday signed an agreement to acquire all of the outstanding common shares of Canadian energy company Nexen Inc. for $27.50 per share in cash. Total consideration for common and preferred shares is about $15.1 billion, while Nexen's current debt of around $4.3 billion will remain outstanding. Following the deal, CNOOC intends to list its common shares on the Toronto Stock Exchange. The deal will be completed by way of a plan of arrangement by fourth quarter of 2012.
by RTT Staff Writer
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