Soft Start Expected For China Stock Market

(RTTNews) - The China stock market bounced higher again on Tuesday, one day after snapping the two-day winning streak in which it had advanced almost 40 points or 1.2 percent. The Shanghai Composite now sits just above the 3,420-point plateau although it's expected to open under pressure on Wednesday.

The global forecast for the Asian markets is negative, with weakness expected from the computer, semiconductor and housing sectors. The European and U.S. markets were down and the Asian bourses are expected to follow that lead.

The SCI finished modestly higher on Tuesday as gains from the financial shares and properties were capped by losses from the oil companies.

For the day, the index added 20.13 points or 0.59 percent to finish at 3,422.66 after trading between 3,417.77 and 3,494.87. The Shenzhen Composite Index gained 17.84 points or 0.87 percent to end at 2,075.17.

Among the actives, Industrial and Commercial Bank of China strengthened 1.58 percent, while Bank of China improved 1.17 percent, China Construction Bank collected 1.45 percent, China Merchants Bank soared 2.39 percent, Agricultural Bank of China advanced 0.80 percent, China Life Insurance gained 0.36 percent, Jiangxi Copper and Gemdale both rose 0.37 percent, Aluminum Corp of China (Chalco) added 0.39 percent, Yankuang Energy shed 0.53 percent, PetroChina sank 0.83 percent, China Petroleum and Chemical (Sinopec) shed 0.46 percent, Huaneng Power skidded 1.11 percent, China Shenhua Energy perked 0.09 percent, Poly Developments rallied 1.62 percent and China Vanke jumped 1.90 percent.

The lead from Wall Street is soft as the major averages opened flat on Tuesday and hugged the line for most of the session before sinking firmly into the red late in the day.

The Dow dropped 154.10 points or 0.35 percent to finish at 44,247.83, while the NASDAQ sank 49.45 points or 0.25 percent to close at 19,687.24 and the S&P 500 fell 17.94 points or 0.30 percent to end at 6,034.91.

The weakness that emerged on Wall Street came as traders continued to cash in on recent strength in the markets ahead of the release of the Labor Department's closely watched report on consumer price inflation later today.

While the Federal Reserve is widely expected to lower rates by another 25 basis points next week, the data could impact the outlook for future rate cuts by the central bank.

CME Group's FedWatch Tool is currently indicating an 86.1 percent chance the Fed will lower rates by a quarter point next week but a 69.1 percent chance the central bank will then leave rates unchanged in late January.

Oil futures settled higher on Tuesday amid hopes that demand from China will increase following recent stimulus measures announced by the Chinese government. West Texas Intermediate Crude oil futures for January closed up $0.22 or 0.32 percent at $68.59 a barrel.