The China stock market has moved lower now in back-to-back sessions, retreating more than 60 points or 3 percent along the way. The Shanghai Composite Index closed just below the 2,060-point plateau, and now analysts are forecasting continued selling pressure at the opening of trade on Wednesday.
The global forecast for the Asian markets is mixed with little movement and a slight downside bias. Profit taking from last week's rallies is expected to limit the upside, as well as uncertainty about the effectiveness of the Federal Reserve's recently announced third round of quantitative easing. The European and U.S. markets were slightly lower, and the Asian bourses figure to follow that lead.
The SCI finished modestly lower on Tuesday following losses from the resource stocks and the automobile producers.
For the day, the index dropped 18.96 points or 0.91 percent to finish at 2,059.54 after trading between 2,053.66 and 2,074.76. The Shenzhen Composite Index fell 4.75 points or 0.6 percent to end at 859.44 for a combined volume of 89.18 billion yuan.
Among the decliners, Chalco shed 3.3 percent, while Yunnan Copper lost 2.9 percent, Tongling Nonferrous Metals fell 3.5 percent, Shanghai Chlor-Alkali Chemical dropped 2.9 percent, Guangzhou Automobile eased 0.7 percent and Hefei Rongshida plummeted 3.5 percent.
The lead from Wall Street offers little clarity as stocks showed a lack of direction on Tuesday, after moving mostly lower in the previous session. While profit taking helped to drag stocks lower at the start of trading, selling pressure waned not long after the open as traders seemed reluctant to sell stocks and miss out on any further upside.
Uncertainty about the effectiveness of the Federal Reserve's recently announced third round of quantitative easing also helped to keep traders on the sidelines, contributing to the lackluster performance.
Traders largely shrugged off a report from the National Association of Home Builders showing that homebuilder confidence improved for the fifth straight month in September and reached a six-year high. The NAHB/Wells Fargo Housing Market Index rose to 40 in September from 37 in August. Economists had been expecting a reading of 38 as the index hit its highest level since coming in at 42 in June of 2006.
Among individual stocks, shares of FedEx (FDX) were down, with the delivery giant falling 3.1 percent after cutting its full-year earnings guidance. FedEx saw Q1 earnings that came in above its downwardly revised guidance but now expects full year earnings of $6.20 to $6.60 per share compared to its previous forecast for $6.90 to $7.40 per share.
Chip maker Advanced Micro Devices (AMD) also posted a notable loss after Thomas Seifert informed the company of his decision to resign as senior vice president and chief financial officer.
Meanwhile, shares of Dole (DOLE) moved higher after the food company said it has agreed to sell its worldwide packaged foods and Asia fresh produce businesses to Japanese trading company Itochu Corp. (ITOCY) for $1.7 billion in cash.
The major U.S. averages ended mixed and little changed on Tuesday. The Dow inched up 11.54 points or 0.1 percent to finish at 13,564.64, while the NASDAQ edged down 0.87 points or less than a tenth of a percent to end at 3,177.80 and the S&P 500 slipped 1.87 points or 0.1 percent to close at 1,459.32.
In economic news, the number of Chinese cities reporting a fall in house prices increased in August from a month earlier, the National Bureau of Statistics said on Monday. House prices fell in 19 out of the 70 cities surveyed in August on a monthly basis. This compares to just 9 cities that recorded price falls in July. Prices increased in 35 cities in August, while that in 16 cities remained unchanged. On an annual basis, home prices fell in 53 Chinese cities after 58 cities reported a decrease in July.
by RTT Staff Writer
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