Rally May Stall For China Stock Market

The China stock market has climbed higher in three straight sessions, collecting almost 60 points or 2 percent along the way. The Shanghai Composite Index now rests just beneath the 3,060-point plateau although it may be stuck in neutral on Thursday.

The global forecast for the Asian markets is mixed to lower, with technology stocks expected to take heavy damage amidst concerns over interest rates. The European markets were up and the U.S. bourses were down and the Asian markets figure to split the difference.

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

For the day, the index gained 22.86 points or 0.75 percent to finish at 3,058.70 after trading between 3,034.67 and 3,100.90. The Shenzhen Composite Index advanced 24.13 points or 1.27 percent to end at 1,918.52.

Among the actives, Industrial and Commercial Bank of China retreated 1.48 percent, while China Construction Bank shed 0.67 percent, China Merchants Bank collected 0.62 percent, China Life Insurance lost 0.59 percent, Jiangxi Copper strengthened 1.61 percent, Aluminum Corp of China (Chalco) climbed 1.55 percent, Yankuang Energy soared 3.75 percent, PetroChina perked 0.19 percent, China Petroleum and Chemical (Sinopec) fell 0.23 percent, Huaneng Power rose 0.27 percent, China Shenhua Energy jumped 1.95 percent, Gemdale plunged 3.94 percent, Poly Developments cratered 3.77 percent, China Vanke sank 0.54 percent, China Fortune Land plummeted 5.26 percent, Beijing Capital Development slumped 2.14 percent and Bank of China, Bank of Communications and China Minsheng Bank were unchanged.

The lead from Wall Street is broadly negative as the major averages shook off early strength on Wednesday and accelerated into the red as the day progressed, finishing well under water.

The Dow tumbled 326.63 points or 1.02 percent to finish at 31,834.11, while the NASDAQ plummeted 373.44 points or 3.18 percent to end at 11,364.24 and the S&P 500 sank 65.87 points or 1.65 percent to close at 3,935.18.

The weakness that emerged on Wall Street came as traders digested a highly anticipated Labor Department report showing the annual rate of inflation slowed less than expected in April.

The data added to concerns the Federal Reserve will raise interest rates more aggressively in an effort to bring inflation down at a faster rate, which analysts fear could lead to a period of stagflation or an outright recession.

Crude oil prices climbed higher on Wednesday, rebounding sharply from recent losses thanks to data showing a significant drop in flows of Russian gas to Europe. West Texas Intermediate Crude oil futures for June ended higher by $5.95 or 6 percent at $105.71 a barrel.

Closer to home, China will release April data for new yuan loans later today, with forecasts suggesting a total of CNY1.515 trillion, down from CNY3.130 trillion in March. Outstanding loan growth is called steady at 11.4 percent.