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Rebound Predicted For China Stock Market

The China stock market headed south again on Tuesday, one day after ending the four-day losing streak in which it had stumbled almost 60 points or 1.7 percent. The Shanghai Composite Index now rests just beneath the 3,570-point plateau although it's expected to bounce higher again on Wednesday.

The global forecast for the Asian markets is positive, with support expected from the oil and technology stocks. The European and U.S. markets were up and the Asian markets are tipped to open in similar fashion.

The SCI finished modestly lower on Tuesday following losses from the oil producers and energy companies, support from the financials and a mixed picture from the property sector.

For the day, the index sank 26.08 points or 0.73 percent to finish at 3,567.44 after trading between 3,562.75 and 3,602.15. The Shenzhen Composite Index dropped 26.09 points or 1.06 percent to end at 2,441.23.

Among the actives, Bank of China rose 0.32 percent, while China Construction Bank added 0.33 percent, China Merchants Bank climbed 1.26 percent, Bank of Communications gained 0.63 percent, China Life Insurance collected 0.50 percent, Jiangxi Copper increased 0.40 percent, Aluminum Corp of China (Chalco) rallied 2.30 percent, Yankuang Energy plunged 3.01 percent, PetroChina skidded 1.13 percent, China Petroleum and Chemical (Sinopec) dropped 0.92 percent, Huaneng Power improved 0.52 percent, China Shenhua Energy fell 0.35 percent, Gemdale lost 0.52 percent, Poly Developments tumbled 1.88 percent, China Vanke perked 0.63 percent, Beijing Capital Development soared 2.35 percent and Industrial and Commercial Bank of China was unchanged.

The lead from Wall Street is firm as the major averages opened lower on Tuesday and were directionless through the morning but accelerated into the green in the afternoon, finishing near daily highs.

The Dow jumped 183.15 points or 0.51 percent to finish at 36,252.02, while the NASDAQ surged 210.62 points or 1.41 percent to end at 15,153.82 and the S&P 500 gained 42.78 points or 0.92 percent to close at 4,713.07.

The turnaround on Wall Street came after Federal Reserve Chair Jerome Powell testified before a Senate Banking Committee hearing on his nomination for another term. Powell highlighted elevated inflation as a result of supply chain issues and said the Fed would use all of its tools to prevent higher inflation from becoming entrenched.

While Powell's remarks have been described as hawkish, they are not seen as indicating the Fed will be more aggressive than already suggested by the minutes of the central bank's latest meeting.

Treasury yields moved to the downside in reaction to Powell's testimony, with the benchmark ten-year yield continuing to give ground after reaching its highest intraday level since January 2020 on Monday.

Crude oil prices moved sharply higher Tuesday, lifting the most active crude futures contract to the highest settlement in about two months. Hopes that the spread of the Omicron variant will not derail the global economy and adversely impact energy demand supported oil prices. West Texas Intermediate crude oil futures for February spiked $2.99 or 3.8 percent at $81.22 a barrel.

Closer to home, China will release December figures for consumer and producer prices later today. Overall inflation is expected to add 0.2 percent on month and 1.8 percent on year, slowing from 0.4 percent on month and 2.3 percent on year in November. Producer prices are called higher by 11.1 percent on year, down from 12.9 percent in the previous month.

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