China Stock Market May Find Traction On Wednesday

The China stock market has moved lower in back-to-back trading days, sinking more than 40 points or 1.2 percent along the way. The Shanghai Composite Index now rests just above the 3,500-point plateau although it’s expected to bounce higher again on Wednesday.

The global forecast for the Asian markets suggests mild upside on earnings optimism and ahead of the FOMC’s monetary policy announcement later today. The European and U.S. markets were up and the Asian bourses figure to open in similar fashion.

The SCI finished sharply lower on Tuesday following losses from the financial shares, property stocks and resource companies.

For the day, the index dropped 38.85 points or 1.10 percent to finish at 3,505.63 after trading between 3,477.66 and 3,559.05. The Shenzhen Composite Index shed 19.51 points or 0.81 percent to end at 2,392.27.

Among the actives, Industrial and Commercial Bank of China surrendered 1.69 percent, while Bank of China dropped 0.98 percent, China Construction Bank declined 1.50 percent, China Merchants Bank plunged 3.46 percent, Bank of Communications tanked 2.77 percent, China Life Insurance retreated 1.58 percent, Jiangxi Copper tumbled 1.92 percent, Aluminum Corp of China (Chalco) cratered 2.96 percent, Yanzhou Coal lost 0.66 percent, PetroChina sank 2.04 percent, China Petroleum and Chemical (Sinopec) skidded 1.66 percent, Huaneng Power plummeted 5.93 percent, China Shenhua Energy stumbled 2.44 percent, Gemdale slumped 1.94 percent, Poly Developments eased 0.16 percent and China Vanke weakened 3.02 percent.

The lead from Wall Street is positive as the major averages immediately shook off a soft open in Tuesday and moved into the green, finishing the day at fresh record highs.

The Dow climbed 138.79 points or 0.39 percent to finish at 36,052.63, while the NASDAQ gained 53.69 points or 0.34 percent to close at 15,649.60 and the S&P 500 rose 16.98 points or 0.37 percent to end at 4,630.65.

The strength that emerged on Wall Street reflected recent upward momentum, as traders reacted to another batch of upbeat earnings news from the likes of athletic apparel maker Under Armour (UAA), drugmaker Pfizer (PFE) and chemical company DuPont (DD).

Overall trading activity was subdued, however, as traders were reluctant to make significant moves ahead of the Fed announcement. The Fed is expected to announce plans to begin scaling back its $120 billion in monthly bond purchases by next month.

The language of the Fed’s statement is likely to be in focus as traders look for clues about the outlook for interest rates amid concerns about the high rate of inflation.

Crude oil futures settled lower Tuesday on concerns about growth after data showed a slowdown in Eurozone manufacturing activity amid rising input costs. West Texas Intermediate Crude oil futures for December settled at $83.91 a barrel, losing $0.14 or 0.2 percent.

Closer to home, China will see October results for the services and composite indexes from Caixin later this morning; in September, their scores were 53.4 and 51.4, respectively.