Oversold China Stock Market Still Called Lower On Friday

The China stock market has moved lower in five straight sessions, tumbling almost 150 points or 4.8 percent along the way. The Shanghai Composite Index now rests just beneath the 3,080-point plateau and it’s tipped to open in the red again on Friday.

The global forecast for the Asian markets suggests consolidation on growing concerns over the outlook for interest rates. The European markets were mixed and the U.S. bourses were sharply lower and the Asian markets figure to follow the latter lead.

The SCI finished sharply lower on Thursday following losses from the oil, energy and resource stocks, while the financials and properties were mixed.

For the day, the index plummeted 71.24 points or 2.26 percent to finish at 3,079.81 after trading between 3,069.68 and 3,160.90. The Shenzhen Composite Index plunged 61.84 points or 3.11 percent to end at 1,923.81.

Among the actives, Industrial and Commercial Bank of China advanced 0.84 percent, while China Construction Bank collected 0.33 percent, China Merchants Bank added 0.44 percent, Bank of Communications dipped 0.20 percent, China Life Insurance climbed 1.09 percent, Jiangxi Copper plunged 4.20 percent, Aluminum Corp of China (Chalco) tanked 2.76 percent, Yankuang Energy rose 0.35 percent, PetroChina plummeted 4.62 percent, China Petroleum and Chemical (Sinopec) retreated 1.40 percent, Huaneng Power tumbled 2.40 percent, China Shenhua Energy declined 1.15 percent, Poly Developments gained 0.46 percent, China Vanke eased 0.26 percent, China Fortune Land slumped 4.56 percent and Bank of China and Gemdale were unchanged.

The lead from Wall Street is negative as the major averages were unable to hold early gains on Thursday, accelerating into the red as the day progressed.

The Dow tumbled 368.03 points or 1.05 percent to finish at 34,792.76, while the NASDAQ dropped 278.41 points or 2.07 percent to close at 13,174.41 and the S&P 500 sank 65.79 points or 1.48 percent to end at 4,393.66.

The sharp pullback on Wall Street came as Treasury yields showed a notable move back to the upside after falling on Wednesday. The yield on the benchmark ten-year note more than offset yesterday’s drop, reaching its highest closing level since December 2018.

Concerns about the outlook for interest rates contributed to the rebound by Treasury yields after Federal Reserve Chair Jerome Powell told the International Monetary Fund that it would be appropriate to raise rates “a little more quickly” and predicted a 50 basis point rate hike would be on the table at the Fed’s May meeting.

Early in the session, stocks benefited from some upbeat earnings news from the likes of Tesla (TSLA), American Airlines (AAL) and United Airlines (UAL).

In economic news, the Labor Department noted a slight decrease in first-time claims for U.S. unemployment benefits last week. Also, the Federal Reserve Bank of Philadelphia said growth in Philadelphia-area manufacturing activity slowed more than expected in April.

Crude oil prices climbed higher Thursday, extending gains from the previous session amid concerns about global crude supply and strong demand in the U.S. West Texas Intermediate Crude oil futures for June ended higher by $1.60 or 1.6 percent at $103.79 a barrel.

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