The China stock market has alternated between positive and negative finishes through the last five trading days since the end of the three-day winning streak in which it had collected almost 100 points or 4.9 percent. The Shanghai Composite Index closed just below the 2,080-point plateau, and now traders are bracing for further damage when the market kicks off trade on Tuesday.
The global forecast for the Asian markets is slightly soft, with investors expected to lock in gains after rallying in recent sessions. Adding to the cautious sentiment are weak economic data from the U.S. and concerns of an escalation of hostilities between China and Japan over a group of disputed islands. The European and U.S. markets were down and the Asian bourses are tipped to open in similar fashion.
The SCI finished sharply lower on Monday on concerns of an escalation of hostilities with Japan over a group of disputed islands. Losses were broadly based, although gold stocks were up as a hedge.
For the day, the index plummeted 45.35 points or 2.14 percent to finish at 2,078.50 after trading between 2,077.48 and 2,121.58. The Shenzhen Composite Index plunged 25.53 points or 2.9 percent to end at 864.19.
Among the actives, China Vanke shed 3.4 percent, China Merchants Property plummeted 7.8 percent, Poly Real Estate retreated 6.7 percent, Guangzhou Automobile dropped 6.1 percent and Hefei Rongshida lost 3.3 percent, while Zhongjin Gold climbed 2.8 percent and Shandong Gold jumped 1.2 percent.
The lead from Wall Street suggests mild consolidation as stocks moved mostly lower on Monday, with traders cashing in on last week's Federal Reserve-inspired rally. Selling pressure remained relatively subdued, however, limiting the downside for the markets.
Profit taking contributed to the weakness, which came after recent gains lifted the major averages to multi-year highs. The Dow and the S&P 500 both ended Friday's trading at their best closing levels in over four years, while the tech-heavy NASDAQ reached a nearly 12-year closing high.
Last week's rally followed the Federal Reserve's announcement of its plans to launch a third round of quantitative easing in an effort to boost the sluggish economy. The Fed said it would purchase additional agency mortgage-backed securities at a pace of $40 billion per month, and it will continue the purchases until the outlook for the labor market improves.
Disappointing manufacturing data also helped to drag stocks lower, with the New York Federal Reserve reporting that conditions for New York manufacturers have deteriorated further in September. The New York Fed said its general business conditions index fell to -10.41 in September from -5.85 in August, with a negative reading indicating a contraction in regional manufacturing activity. Economists had been expecting -2.0.
In corporate news, shares of Lowe's (LOW) closed moderately lower after the home improvement retailer announced that it has withdrawn its offer to acquire Canadian rival Rona for C$14.50 per share in cash.
The major U.S. averages were in the red on Monday as the Dow fell 40.27 points or 0.3 percent to finish at 13,553.10, while the NASDAQ edged down 5.28 points or 0.2 percent to end at 3,178.67 and the S&P 500 slipped 4.58 points or 0.3 percent to close at 1,461.19.
by RTT Staff Writer
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