China Stock Market May Spin Its Wheels On Thursday

The China stock market has finished higher in two of three trading days since the end of the three-day losing streak in which it had dropped more than 45 points or 1.3 percent. The Shanghai Composite Index now rests just above the 3,455-point plateau although it may be stuck in neutral on Thursday.

The global forecast for the Asian markets is mixed after the Federal Reserve signaled a rate hike in the near future, although it’s already been largely priced in. Surging crude oil prices should also limit the downside. The European markets were up and the U.S. bourse were mixed and little changed and the Asian markets figure to follow the latter lead.

The SCI finished modestly higher on Wednesday following gains from the financials and resource stocks, while the properties were mixed.

For the day, the index gained 22.61 points or 0.66 percent to finish at 3,455.67 after trading between 3,417.76 and 3,462.12. The Shenzhen Composite Index advanced 16.10 points or 0.70 percent to end at 2,329.17.

Among the actives, Industrial and Commercial Bank of China collected 0.43 percent, while China Construction Bank added 0.67 percent, China Merchants Bank rose 0.20 percent, Bank of Communications jumped 1.69 percent, China Life Insurance perked 0.35 percent, Jiangxi Copper climbed 1.26 percent, Aluminum Corp of China (Chalco) surged 4.62 percent, Yankuang Energy shed 0.62 percent, PetroChina spiked 2.72 percent, China Petroleum and Chemical (Sinopec) rallied 1.43 percent, Huaneng Power soared 2.93 percent, China Shenhua Energy dropped 0.98 percent, Gemdale skidded 1.08 percent, Poly Developments was up 0.06 percent, China Vanke fell 0.43 percent, China Fortune Land improved 1.22 percent, Beijing Capital lost 0.34 percent and Bank of China was unchanged.

The lead from Wall Street is mixed to lower as the major averages opened firmly higher on Wednesday before late selling sent the Dow and S&P into the red.

The Dow dropped 129.64 points or 0.38 percent to finish at 34,168.09, while the NASDAQ rose 2.82 points or 0.02 percent to close at 13,542.12 and the S&P 500 fell 6.52 points or 0.15 percent to end at 4,349.93.

The late-day pullback on Wall Street came after the Fed indicated that it plans to begin raising interest rates “soon,” citing elevated inflation and a strong labor market. The Fed left interest rates unchanged at near-zero levels as widely expected but said “it will soon be appropriate to raise the target range for the federal funds rate.”

The central bank also said it would further reduce the pace of its bond purchases to $30 billion per month beginning in February, with the Fed saying it expects to end its asset purchase program by early March.

In a separate statement, the Fed outlined plans to significantly reduce the size of its balance sheet, saying it expects to start the reductions after it begins raising interest rates.

Crude oil futures settled higher on Wednesday as prices climbed amid rising geopolitical tensions. U.S. President Joe Biden has warned Moscow of damaging sanctions, including measures personally targeting President Vladmir Putin, if Russia invades Ukraine. West Texas Intermediate Crude oil futures for March ended higher by $1.75 or 2 percent at $87.35 a barrel, the highest settlement since October 2014.

Closer to home, China will see December figures for industrial profits later today; in November, profits surged 38.0 percent on year.