FX.co ★ Rally May Stall For China Stock Market

The Chinese stock market has experienced a modest upward trend over the past two trading sessions, accumulating an increase of nearly 7 points or 0.2 percent. At present, the Shanghai Composite Index is positioned slightly above the 3,400-point mark. Expectations for Monday suggest that the index will maintain a relatively steady position.

The outlook for Asian markets this week is uncertain, with a potential downward trend influenced by the performance of technology stocks. While European markets have posted gains, U.S. markets have faced declines, and it appears Asian markets might align with the latter.

On Friday, the Shanghai Composite Index achieved a marginal increase, with the performance of property and energy sectors counterbalanced by weaker results from the financial and oil sectors. The index rose by 2.06 points or 0.06 percent to conclude at 3,400.14, following a trading range between 3,388.32 and 3,418.95. Meanwhile, the Shenzhen Composite Index went up by 4.00 points or 0.20 percent to close at 2,014.96.

In terms of individual shares, Industrial and Commercial Bank of China fell by 0.14 percent, Bank of China decreased by 0.36 percent, while China Construction Bank and China Merchants Bank dropped by 0.68 percent and 0.35 percent, respectively. Agricultural Bank of China saw a slight improvement of 0.19 percent. Among other movers, China Life Insurance declined by 0.42 percent, Jiangxi Copper eased by 0.05 percent, and Aluminum Corporation of China (Chalco) decreased by 1.09 percent. Yankuang Energy and PetroChina both lost 0.57 percent and 0.56 percent, respectively. However, Huaneng Power experienced a rise of 1.18 percent, China Shenhua Energy increased by 0.14 percent, Gemdale saw a growth of 1.54 percent, and Poly Developments and China Vanke saw gains of 0.55 percent and 0.53 percent, respectively.

Wall Street set a negative tone, with major indices starting and remaining in negative territory throughout the trading day, closing near their session lows. The Dow Jones Industrial Average dropped by 333.59 points, or 0.77 percent, to close at 42,992.21. The NASDAQ fell by 298.37 points, or 1.49 percent, to finish at 19,722.03, and the S&P 500 decreased by 66.75 points, or 1.11 percent, to end at 5,970.84. Despite this, the Dow rose by 1.4 percent over the week, while both the NASDAQ and the S&P advanced by 1.5 percent. It’s worth noting that trading volumes were likely affected by the holiday season, with many investors taking time off between Christmas and New Year’s.

On the economic front, data indicated an increase in U.S. retail inventories, excluding automobiles, by 0.6 percent month-on-month in November, following an upward revision to a 0.3 percent rise the previous month, based on preliminary estimates.

Oil prices saw an uptick on Friday following reports of a significant reduction in U.S. crude inventories the preceding week. The ongoing conflict between Russia and Ukraine also contributed to the support of oil prices. West Texas Intermediate (WTI) Crude oil futures for February concluded at $70.60 per barrel, reflecting a gain of approximately 1.4 percent.