The China stock market turned lower again on Monday, one session after it had ended the three-day losing streak in which it had fallen almost 45 points or 1.8 percent. The Shanghai Composite Index ended just above the 2,380-point plateau, and now investors are bracing for additional selling pressure when the market kicks off trade on Tuesday.
The global forecast for the Asian markets remains grim thanks to ongoing concerns about the political uncertainty in Greece. As political parties in Greece have failed to form a coalition government, fresh elections would mean weeks of uncertainty in the Eurozone over Greece's continued membership in the single currency zone. The downside in Asia may be limited by bargain-hunting, however, following heavy damage in the previous session. The European and U.S. markets finished firmly in the red, and the Asian bourses are tipped to open in similar fashion.
The SCI finished modestly lower on Monday as losses from financial shares were offset by support from the properties and brokerages.
For the day, the index eased 14.26 points or 0.60 percent to finish at 2,380.73 after trading between 2,377.98 and 2,411.27. The Shenzhen Composite Index lost 0.5 percent to end at 956.19.
Among the decliners, China Construction Bank shed 1.5 percent, while Bank of China lost 1.0 percent and China Merchants Bank fell 1.1 percent.
Finishing higher, Poly Real Estate climbed 1.1 percent, while Gree Real Estate jumped 1.9 percent, Citic Securities Company collected 0.8 percent, Haitong Securities added 0.5 percent and Guoyuan Securities spiked 1.7 percent.
The lead from Wall Street suggests further consolidation as stocks saw considerable weakness on Monday. The losses extended a recent downward trend for the markets, which have moved lower for most of May. With Monday's losses, the major averages all ended the session at their worst closing levels in over three months.
The weakness followed lingering concerns about the political uncertainty in Greece, as the debt-plagued nation could be forced to hold a new round of elections due to lawmakers' inability to form a coalition government.
Traders also kept a close eye on developments in China, where the central bank announced over the weekend that it would lower the reserve requirement for banks by 50 basis points in a bid to inject more liquidity into the system. The move added to recent concerns about the outlook for growth in China, the world's second largest economy behind the U.S.
In corporate news, shares of Yahoo (YHOO) bucked the downtrend after the online media giant announced the resignation of CEO Scott Thompson, who left the company over a resume padding scandal. The company named Ross Levinsohn as interim CEO. Yahoo also said Fred Amoroso has been named Chairman of the Board of Directors, replacing Roy Bostock.
The major U.S. averages finished sharply lower on Monday as the Dow fell 125.25 points or 1 percent to finish at 12,695.35, while the NASDAQ dropped 31.24 points or 1.1 percent to end at 2,902.58 and the S&P 500 slid 15.04 points or 1.1 percent to 1,338.35.
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