Shanghai Stocks May Snap Skid

(RTTNews) - After a two-day winning streak that saw the China stock market add more than 6 percent, the Shanghai Composite Index has now finished lower in back-to-back sessions - although the current skid has cost the market less than 1 percent. Now analysts suggest that the SCI may rebound back into positive territory on Wednesday, possibly testing resistance at 3,000 points.

The Asian bourses can look to another modestly positive forecast after the price of crude oil retreated again, easing the inflationary pressures. Some modest earnings reports out of the United States add further positive sentiment, although the upside may be limited by subdued economic data from the world's largest economy. Still, Wall Street finished to the upside, and the Asian markets are likely to follow suit.

The SCI finished slightly lower on Wednesday after opening sharply to the upside before afternoon profit taking erased those gains. Strength among the airlines and oil refiners was offset by weakness from the financials, property stocks and coal producers.

For the day, the index eased 8.27 points or 0.29 percent to close at 2,837.85 after trading between 2,887.58 and 2,831.11 on turnover of 64.22 billion yuan. The Shanghai A-share Index lost 8.63 points or 0.29 percent at 2,976.89, while the Shenzhen A-share Index shed 9.39 points or 1.05 percent to 887.49.

Among the gainers, Sinopec rose 0.8 percent, while PetroChina jumped 0.1 percent, Shanghai Airlines surged 4.1 percent and China Eastern Airlines jumped 4.16 percent. Finishing lower, China Vanke fell 1.4 percent and China Merchants Property ended down 2.3 percent.

Wall Street offers a cautiously optimistic lead as stocks ended Wednesday's session with moderate gains after oil fell for a second day. Nonetheless, a slew of mixed corporate data kept buying interest muted.

Investors seemed encouraged that oil remained lower during the day as traders generally ignored another decline in weekly inventories. Light sweet crude for September delivery closed at $124.44 a barrel, down $3.98 for the session. The recent drop in oil prices has been a relief for the markets after they had been pressured for the past months as oil hit record highs. Investors were also looking at a slew of corporate results, including from AT&T (T | Quote | Chart | News | PowerRating), McDonald's (MCD | Quote | Chart | News | PowerRating) and Pfizer (PFE | Quote | Chart | News | PowerRating).

Economic activity has slowed somewhat over the past month, according to the Federal Reserve's Beige Book, a compilation of anecdotal evidence on economic conditions from each of the 12 Federal Reserve districts. The report said that consumer spending was sluggish or slowing in nearly all of the Fed districts, although it noted that the tax rebate checks issued as part of the government's economic stimulus plan boosted sales for some items, especially electronics.

The Beige Book, generally released about two weeks before the next Federal Open Market Committee meeting, is closely watched for indications of the committee's upcoming decision on interest rates. After halting its string of interest rate cuts at its June meeting, the committee's upcoming meeting on August 5th is likely to attract a lot of attention. Analysts currently seem mixed over whether the FOMC will raise interest rates or leave them unchanged at 2 percent.

The major averages traded in a range for most of the afternoon, ending the day with modest gains. The Dow closed up 29.88 points or 0.3 percent at 11,632.38, the Nasdaq closed up 21.92 points or 1 percent at 2,325.88 and the S&P 500 closed up 5.18 points or 0.4 percent at 1,282.18.

In corporate news, Singapore-listed Allgreen Properties has announced a joint venture with Hong Kong's Kerry Properties and Shangri-La Asia to invest up to $1.07 billion in a hotel and residential property project in northern China. Kerry Properties will hold a 40 percent stake in the joint venture, while Shangri-La Asia will own 20 percent and Allgreen Properties will have 25 percent, the company said in a statement.

Also, Chinese Internet search provider Baidu.com Inc saw an 86.7 percent surge in its net income for the second quarter as revenues doubled, the company said on Thursday. The Beijing-based Baidu.com reported net income of RMB265.0 million or $38.6 million, up 86.7 percent from RMB142 million and earnings increased to RMB7.62 or US$1.11 per share from RMB4.09 per share in the same quarter last year. Excluding stock-based charges, earnings were RMB8.46 or US$1.23 per share for the latest quarter.

For comments and feedback: contact editorial@rttnews.com Copyright(c) 2008 RealTimeTraders.com, Inc. All Rights Reserved

More News:   Market Updates | Stock Alerts | All Trading News | Stock Index