The China stock market bounced right back to the upside again on Wednesday, one session after it had ended the three-day winning streak in which it had collected almost 100 points or 4.9 percent. The Shanghai Composite Index closed just above the 2,125-point plateau, and now traders are looking for continued if mild upside when the market opens on Thursday.
The global forecast for the Asian markets is mixed with a touch of upside as good news from Europe is tempered by apprehension ahead of the Federal Reserve's monetary policy decision later today. Germany's top court has cleared the way for the ratification of the European Stability Mechanism. But continued uncertainty about further stimulus from the Fed may limit the upside for the markets. The European markets were mixed and the U.S. bourses were slightly higher, and the Asian markets figure to split the difference.
The SCI finished slightly higher on Wednesday as gains from the resource stocks were offset by weakness from the financial sector.
For the day, the index added 6.00 points or 0.28 percent to finish at 2,126.55 after trading between 2,109.14 and 2,137.89. The Shenzhen Composite Index collected 4.72 points or 0.5 percent to end at 901.29 for a combined volume of 144.85 billion yuan.
Among the actives, Jiangxi Copper spiked 3.3 percent, China Nonferrous Metal climbed 2.9 percent and Western Mining jumped 1.7 percent, while Industrial and Commercial Bank of China shed 1.1 percent, Bank of Communications lost 1.4 percent and Agricultural Bank dipped 0.4 percent.
The lead from Wall Street suggests mild upside as stocks moved modestly higher on Wednesday but ended well off their best levels of the day. The markets benefited from a positive reaction to the latest news out of Europe, but buying interest was subdued ahead of a closely watched announcement from the Federal Reserve.
The upside followed news that Germany's Federal Constitutional Court cleared the way for the ratification of the European Stability Mechanism, rejecting temporary injunctions against the European bailout fund. The court imposed certain conditions, capping Germany's liability. The court said Germany must cap its bailout fund liability at 190 billion euros and said further expansion of the country's share needs Parliament's approval.
However, continued uncertainty about further stimulus from the Federal Reserve helped to limit the upside for the markets, with the central bank due to announce its latest monetary policy decision later today. Many analysts expect the Fed to announce a third round of quantitative easing, but traders seemed reluctant to make any significant moves ahead of the actual announcement.
Traders shrugged off a Labor Department report showing that U.S. import prices rose by less than expected in August despite a rebound in fuel prices. Also, U.S. export prices increased by more than expected during the month amid another notable increase in prices for agricultural exports. A separate report from the Commerce Department showed that wholesale inventories rebounded by more than expected in July.
The major U.S. averages were up on Wednesday as the Dow inched up 9.99 points or 0.1 percent to finish at 13,333.35, while the NASDAQ rose 9.78 points or 0.3 percent to end at 3,114.31 and the S&P 500 edged up 3.00 points or 0.2 percent to close at 1,436.56.
For comments and feedback: editorial@rttnews.com