Oversold China Stock Market Called Higher On Thursday

The China stock market has finished lower in six straight sessions, retreating almost 240 points or 7 percent in that span. The Shanghai Composite Index now rests just above the 3,255-point plateau although it’s finally expected to find relief on Thursday.

The global forecast is broadly positive on bargain hunting and easing inflation concerns after crude oil prices retreated sharply. The European and U.S. markets were firmly higher and the Asian bourses are tipped to open in similar fashion.

The SCI finished sharply lower again on Wednesday following losses from the financials, properties and resource stocks, although the energy companies provided support.

For the day, the index dropped 37.14 points or 1.13 percent to finish at 3,256.39 after trading between 3,147.68 and 3,321.48. The Shenzhen Composite Index sank 23.52 points or 1.10 percent to end at 2,116.15.

Among the actives, Industrial and Commercial Bank of China retreated 1.30 percent, while Bank of China shed 0.65 percent, China Construction Bank sank 0.83 percent, China Merchants Bank tanked 2.40 percent, Bank of Communications skidded 1.05 percent, China Life Insurance cratered 3.21 percent, Jiangxi Copper plunged 5.18 percent, Aluminum Corp of China (Chalco) plummeted 5.81 percent, Yankuang Energy jumped 2.09 percent, PetroChina declined 2.71 percent, China Petroleum and Chemical (Sinopec) surrendered 2.13 percent, Huaneng Power soared 3.31 percent, China Shenhua Energy surged 4.10 percent, Gemdale stumbled 4.21 percent, Poly Developments slumped 3.45 percent, China Vanke weakened 3.90 percent, China Fortune Land lost 3.02 percent and Beijing Capital Development dropped 7.43 percent.

The lead from Wall Street is upbeat as the major averages opened sharply higher on Wednesday and stayed that way throughout the session.

The Dow surged 653.61 points or 2.00 percent to finish at 33,286.25, while the NASDAQ spiked 459.99 points or 3.59 percent to end at 13,255.55 and the S&P 500 soared 107.18 points or 2.57 percent to close at 4,277.88.

A pullback by commodities prices contributed to the rebound on Wall Street, as the recent surge in prices had led to worries about even higher inflation.

Oil prices plunged sharply on Wednesday, a day after recording their highest close in 14 years, after analysts said the U.S. and U.K. ban on Russian oil imports will be far less disruptive to global markets than a full international embargo. West Texas Intermediate Crude oil futures for April ended down by $15 or 12.1 percent at $108.70 a barrel.

The markets also benefited from bargain hunting, as traders looked to pick up stocks at reduced levels following the recent weakness.

Closer to home, China will see February data for new yuan loans later today, with forecasts suggesting a total of CNY1,485 billion – down from CNY3,980 billion in January. The M2 money supply is tipped to rise 9.5 percent on year, slowing from 9.8 percent a month earlier.