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China Market Poised To Snap Losing Streak

11/11/2012 7:50 PM ET

The China stock market has finished lower now in five straight sessions, declining almost 50 points or 2.4 percent in that span. The Shanghai Composite Index finished just below the 2,070-point plateau, and now traders are expected to go shopping when the market kicks off trade on Monday.

The global forecast for the Asian markets is positive following upbeat economic data from China and the United States - while bargain hunting also may be in order as many of the regional bourses saw heavy damage last week. China posted a merchandise trade surplus of $31.99 billion in October as exports surged 11.6 percent on year, while the U.S. consumer sentiment index climbed for the fourth straight month and hit a five-year high. The European markets were mixed on Friday and the U.S. bourses were up, and the Asian markets are expected to follow the latter lead.

The SCI finished barely lower on Friday, pushed into negative territory by weakness from the oil companies and the brokerages.

For the day, the index eased 2.44 points or 0.12 percent to finish at 2069.07 after trading between 2,062.42 and 2,077.23. The Shenzhen Composite Index dipped 3.25 points or 0.4 percent to end at 828.46.

Among the decliners, PetroChina shed 0.3 percent, while Sinopec lost 0.6 percent, Citic Securities fell 1.1 percent and Guoyuan Securities dipped 1.8 percent.

The lead from Wall Street is firm as stocks saw modest strength on Friday after ending the two previous sessions sharply lower - although they were well off their best levels of the day amid lingering concerns about whether politicians in Washington can avert the looming fiscal cliff.

Stocks moved mostly higher in the morning as the U.S. consumer sentiment index from Reuters and the University of Michigan came in at 84.9 in November compared to the final October reading of 82.6 - rising for the fourth straight month and hitting its highest level since July 2007.

However, buying interest waned in the afternoon amid continued concerns about whether President Barack Obama and congress will be able to avert the fiscal cliff looming at the end of the year. While members of both parties have called for compromise on the issue, recent statements suggest that a continued disagreement over taxes on the wealthy could lead to continued gridlock on Capitol Hill. Obama has indicated that he would not accept a plan that lets the richest Americans off the hook.

Meanwhile, House Speaker John Boehner, R-Ohio, has said he is willing to include increased revenues in an agreement but has ruled out higher tax rates, calling instead for closing tax loopholes. Without action by Congress, the end of the year will see the expiration of the Bush-era tax cuts as well as the automatic spending cuts that were part of last summer's debt ceiling deal.

The major U.S. averages were higher on Friday as the Dow inched up 4.07 points or less than a tenth of a percent to finish at 12,815.39, while the NASDAQ rose 9.29 points or 0.3 percent to end at 2,904.87 and the S&P 500 climbed 2.34 points or 0.2 percent to close at 1,379.85. The major averages were all down for the week as the Dow fell 2.1 percent, while the NASDAQ and the S&P 500 slid 2.6 percent and 2.4 percent, respectively.

In economic news, China posted a merchandise trade surplus of $31.99 billion in October, the National Bureau of Statistics said on Saturday - blowing past expectations for $27.15 billion after coming in at $27.67 in September.

Exports surged 11.6 percent on year to $175.57 billion, beating forecasts for a 10 percent gain after rising 9.9 percent in the previous month. Imports were up 2.4 percent on year - unchanged from a month earlier but below forecasts for a 3.2 percent increase.

Also, the consumer price index in China came in at 1.7 percent in October, the National Bureau of Statistics said on Friday. That was below forecasts for 1.9 percent, which would have been unchanged from the September reading. The bureau also said that producer prices contracted 2.8 percent on year versus forecasts for a decline of 2.7 percent following the 3.6 percent fall in the previous month.

Also, China's retail sales rose 14.5 percent on year in October, faster than 14.2 percent increase in the previous month. Economists had 14.4 percent. During the first ten months of the year, retail sales recorded a growth of 14.1 percent compared to the same period last year.

Also, China's industrial production expanded 9.6 percent on year, faster than 9.2 percent in September. Economists had expected 9.4 percent. This was the strongest growth rate in five months and matched the pace of growth in May 2012. During the first ten months of the year, production rose 5 percent on year.

Finally, China's total fixed asset investment grew 20.7 percent on year during the January-October period - in line with forecasts for 20.6 percent growth.

by RTT Staff Writer

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