China Stock Market May Extend Wednesday’s Losses

The China stock market has alternated between positive and negative finishes through the last five trading days since the end of the three-day winning streak in which it had advanced almost 60 points or 2 percent. The Shanghai Composite Index now rests just above the 3,085-point plateau and the losses may accelerate on Thursday.

The global forecast for the Asian markets suggests consolidation on profit taking, with oil and retail stocks leading the way lower. The European and U.S. markets were down and the Asian markets are tipped to follow that lead.

The SCI finished modestly lower on Wednesday following losses from the financials, properties and resource stocks.

For the day, the index shed 7.72 points or 0.25 percent to finish at 3,085.98 after trading between 3,071.30 and 3,105.84. The Shenzhen Composite Index added 1.48 points or 0.08 percent to end at 1,941.154.

Among the actives, Industrial and Commercial Bank of China and China Shenhua Energy both dropped 0.86 percent, while Bank of China fell 0.31 percent, China Construction Bank collected 0.34 percent, China Merchants Bank dipped 0.26 percent, Bank of Communications skidded 1.01 percent, China Life Insurance retreated 1.35 percent, Jiangxi Copper sank 0.92 percent, Aluminum Corp of China (Chalco) slumped 0.87 percent, Yankuang Energy tumbled 1.80 percent, PetroChina lost 0.96 percent, China Petroleum and Chemical (Sinopec) declined 0.92 percent, Huaneng Power soared 4.44 percent, Gemdale tanked 2.20 percent, Poly Developments shed 1.06 percent, China Vanke stumbled 1.31 percent and China Fortune Land weakened 0.84 percent.

The lead from Wall Street is brutally negative as the major averages opened lower on Wednesday and saw the losses accelerate as the day progressed, ending deep in the red.

The Dow plummeted 1,164.52 points or 3.57 percent to finish at 31,490.07, while the NASDAQ plunged 566.37 points or 4.73 percent to close at 11,418.15 and the S&P 500 tumbled 165.17 points or 4.04 percent to end at 3,923.68.

Retail stocks led the markets lower, with the Dow Jones U.S. Retail Index plunging 7.7 percent to its lowest closing level in almost two years. Target (TGT) posted a particularly steep loss after the discount retailer reported quarterly earnings that missed expectations.

Substantial weakness was also visible among transportation stocks, as reflected by the 7.4 percent drop by the Dow Jones Transportation Average. Housing stocks also saw significant weakness on the day, dragging the Philadelphia Housing Sector Index down by 4.6 percent.

In economic news, the Commerce Department noted a modest decrease in new residential construction and building permits in April.

Crude oil futures settled lower on Wednesday despite data showing a drop in crude inventories last week. A stronger dollar amid rising prospects of sharper interest rate hikes by the Federal Reserve also contributed to the decline. West Texas Intermediate Crude oil futures for ended lower by $2.81 or about 2.5% at $109.59 a barrel.