Plus   Neg

China Stock Market May Extend Losses

The China stock market on Wednesday halted the three-day winning streak in which it had surged more than 100 points or 4.7 percent en route to a fresh four-month closing high. The Shanghai Composite Index remained just above the 2,160-point plateau, and now traders are bracing for continued selling pressure when the market kicks off trade on Thursday.

The global forecast for the Asian markets is negative thanks to renewed concerns over the looming fiscal cliff in the United States. Soft economic data adds to the cautious sentiment, as does profit taking after mostly solid gains in the regional bourses earlier this week. The European markets were higher on Wednesday and the U.S. bourses were down - and the Asian markets are tipped to follow the latter lead.

The SCI finished flat on Wednesday as gains from the automobile producers were offset by losses from the financial sector.

For the day, the index eased 0.23 points or 0.01 percent to finish at 2,162.24 after trading between 2,154.29 and 2,175.39. The Shenzhen Composite Index added 5.36 points or 0.7 percent to end at 822.72 for a combined volume of 141.26 billion yuan.

Among the actives, Changan Automobile surged by the 10 percent daily limit, while BYD soared 6.4 percent, Chongqing Department Store spiked 3.4 percent, Kunming Sinobright Group climbed 3.0 percent, China Minsheng Bank shed 0.1 percent and Citic Securities fell 0.3 percent.

The lead from Wall Street suggests consolidation as stocks came under pressure on Wednesday after showing a lack of direction throughout much of the trading day. Profit taking following recent strength contributed to the pullback by the markets.

Continued uncertainty about the looming fiscal cliff also generated some selling pressure, with remarks by President Barack Obama and House Speaker John Boehner suggesting that an agreement might not be as close as it appeared earlier this week. Obama was highly critical of Boehner's proposed "Plan B" legislation, which would extend tax cuts for people making up to $1 million.

Boehner unveiled the "Plan B" proposal on Tuesday as an alternative if lawmakers are unable to reach a broader budget agreement. Obama claimed that the legislation continues large tax cuts for the very wealthiest individuals while raising taxes on millions of working families.

Later in the day, Boehner said the House will pass the bill on Thursday and argued that the president would be responsible for the largest tax increase in American history if he can't persuade Senate Democrats to approve the legislation.

On the economic front, the Commerce Department reported that housing starts fell 3.0 percent to an annual rate of 861,000 in November from the revised October estimate of 888,000. Economists had expected housing starts to fall to 865,000 from the 894,000 originally reported for the previous month.

Also, the Commerce Department said building permits rose 3.6 percent to an annual rate of 899,000 in November from the revised October rate of 868,000. With the increase, building permits reached their highest annual rate since July of 2008.

The major U.S. markets were down on Wednesday as the Dow fell 98.99 points or 0.7 percent to finish at 13,251.97, while the NASDAQ dipped 10.17 points or 0.3 percent to close at 3,044.36 and the S&P slid 10.98 points or 0.8 percent to end at 1,435.81.

In economic news, China will on Thursday see the November results for the Conference Board's leading and coincident indexes; in October, they were up 1.5 percent and 1.3 percent, respectively.

Also, Hong Kong will on Thursday release inflation data for November; in October, the rate came in at 3.8 percent.

by RTTNews Staff Writer

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