The China stock market on Thursday finally halted the eight-day winning streak in which it had surged more than 145 points or 6.2 percent. The Shanghai Composite Index ended just below the 2,420-point plateau, and now analysts are predicting continued selling pressure at the opening of trade on Friday.
The global forecast for the Asian markets is soft as uncertainty persists regarding the financial situation in Europe after European Central Bank President Mario Draghi warned that the risks surrounding the economic outlook for the euro area continue to be on the downside. The European markets were mostly lower and the U.S. bourses were down - and the Asian markets are also expected to open in the red.
The SCI finished modestly lower on Thursday following profit taking among the financial shares and the property stocks.
For the day, the index retreated 15.95 points or 0.66 percent to finish at 2,418.53 after trading between 2,394.22 and 2,433.89. The Shenzhen Composite Index added 0.6 percent to end at 956.73.
Among the decliners, China Merchants Bank shed 1.6 percent, while Bank of China dropped 2.2 percent, Bank of Communication fell 2.8 percent, China Vanke dipped 2.3 percent, Poly Real Estate retreated 0.9 percent and Gemdale eased 0.5 percent.
The lead from Wall Street is negative as stocks finished lower on Thursday, despite a notable recovery attempt in the afternoon. Buying interest remained somewhat subdued, however, and the major averages still ended the day in the red.
The early weakness was due to uncertainty about the financial situation in Europe following Draghi's comments. Draghi said European economic activity should gradually recover later in 2013, but he warned that the risks surrounding the economic outlook for the euro area continue to be on the downside.
Draghi's remarks came after the ECB left interest rates unchanged despite concerns about the recent appreciation in the value of the euro.
Selling pressure was also generated by worries that lawmakers in Washington will be unable to reach an agreement to avoid the automatic spending cuts due to go into effect at the end of the month. President Barack Obama has called on Congress to pass a smaller budget package in order to temporarily delay the automatic cuts for a few months, although Republicans have expressed opposition to the idea.
Traders were also presented with a mixed batch of U.S. economic data regarding weekly jobless claims and fourth quarter productivity.
The Labor Department said that first-time claims for U.S. unemployment benefits saw a modest decrease in the week ended February 2, although claims remain well above the five-year low set last month. The report showed that initial jobless claims dipped to 366,000, a decrease of 5,000 from the previous week's revised figure of 371,000.
However, the Labor Department also reported a bigger than expected drop in labor productivity in the fourth quarter, with a notable increase in hours worked more than offsetting a modest increase in output.
Among individual stocks, Apple (AAPL) showed a strong move to the upside late in the trading day after the iPad and iPhone maker releasing a statement noting that its management and Board of Directors have been in active discussions about returning additional cash to shareholders.
The major U.S. averages were down on Thursday as the Dow dipped 42.47 points or 0.3 percent to finish at 13,944.05, while the NASDAQ edged down 3.35 points or 0.1 percent to close at 3,165.13 and the S&P 500 slipped 2.73 points or 0.2 percent to end at 1,509.39.
In economic news, China is scheduled to release a raft of data on Friday ahead of the Lunar New Year break. On tap are January figures for imports, exports, trade balance, CPI and PPI.
Imports are expected to surge 23.5 percent on year after adding 6.0 percent in December. Exports are called higher by 17.3 percent on year after rising 14.1 percent in the previous month. The trade balance is expected to show a surplus of $24.20 billion, down from the $31.62 billion surplus a month earlier. CPI is expected to come in at 2.0 percent, down from 2.5 percent in December. PPI is tipped to fall 1.5 percent after dipping 1.9 percent a month earlier.
by RTT Staff Writer
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