The China stock market has finished lower now in three straight sessions, fiving away more than 40 points or 1.9 percent in the process. The Shanghai Composite Index finished just below the 2,245-point plateau, and now analysts are forecasting continued selling pressure at the opening of trade on Monday.
The global forecast for the Asian markets suggests consolidation after the latest round of downgrades in Europe by ratings agency Standard & Poor's. Soft quarterly earnings from JPMorgan are expected to add to the selling pressure, particularly in the financial sector, although steel, technology and gold stocks also are likely to decline. The European and U.S. markets ended firmly in the red on Friday and the Asian markets are expected to open in similar fashion.
Caution ahead of GDP and other economic data on Tuesday may add to the cautious sentiment.
The SCI finished sharply lower on Friday following heavy damage among the financial shares and the property stocks.
For the day, the index plunged 30.34 points or 1.34 percent to finish at 2244.58 after trading between 2,225.74 and 2,281.53. The Shenzhen Composite Index plummeted 3.5 percent to end at 845.93.
Among the decliners, China Merchants Bank shed 1.0 percent, while Citic Securities dropped 2.3 percent, China Vanke eased 0.8 percent and Poly Real Estate retreated 1.1 percent.
The lead from Wall Street is negative as renewed concerns about the financial situation in Europe contributed to notable weakness on Friday, although stocks ended the session well off their worst levels of the day due in part to the release of upbeat U.S. consumer sentiment data.
Stocks plunged in early trading as traders reacted to reports that Standard & Poor's was set to downgrade the credit ratings for several European nations. S&P had warned last month that several European countries could face ratings downgrades due to the agency's belief that systemic stresses had risen to the extent that they now put downward pressure on the credit standing of the Eurozone as a whole.
Those reports came to fruition later in the day when S&P lowered the long-term ratings on Cyprus, Italy, Portugal and Spain by two notches; lowered the long-term ratings on Austria, France, Malta, Slovakia, and Slovenia by one notch; and affirmed the long-term ratings on Belgium, Estonia, Finland, Germany, Ireland, Luxembourg and the Netherlands.
A negative reaction to quarterly results from JP Morgan (JPM) also generated some selling pressure, with the financial giant reporting a drop in fourth quarter earnings on weaker than expected revenues. Shares of JP Morgan fell by 2.5 percent on the news.
However, a report from Reuters and the University of Michigan showing a significant improvement in U.S. consumer sentiment in January helped to limit the downside for the markets. The consumer sentiment index jumped to 74.0 in January from the final December reading of 69.9. Economists had expected the index to edge up to 71.5. With the increase, the index reached its highest level since 74.3 last May.
Before the start of trading, the Commerce Department reported that the U.S. trade deficit widened by much more than anticipated in November. The Labor Department also reported a modest drop in import prices in December as well as decrease in export prices.
After moving sharply lower in early trading, the major averages regained some ground but still closed in the red. The Dow slipped 48.96 points or 0.4 percent to 12,422.06, the NASDAQ fell 14.03 points or 0.5 percent to 2,710.67 and the S&P 500 dipped 6.41 points or 0.5 percent to 1,289.09. Despite the losses on the day, the major averages all closed higher for the week. The Dow rose by 0.5 percent for the week, while the NASDAQ jumped 1.4 percent and the S&P 500 climbed 0.9 percent.
In economic news, China's foreign exchange reserves declined at the end of 2011, marking the first fall in the world's largest stockpile since the Asian crisis in 1998, the People's Bank of China said on Friday. Reserves totaled $3.18 trillion at the end of December, representing a $20.6 billion decline from the three months to September. In November, reserves totaled $3.22 trillion.
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Market Analysis
June 12, 2026 17:14 ET Major central bank action was the focus this week in economic news. The European Central Bank became the first major central bank to move in response to the rising inflationary pressures in the backdrop of the conflict in the Middle East. In North America, the U.S. inflation and trade data as well as Canada’s central bank decision gained attention. The Chinese trade data was the main news in Asia.