The Chinese stock market has been in a slump across four consecutive sessions, seeing nearly a 5.2 percent decrease, equivalent to almost 140 points. At this point, the Shanghai Composite Index barely remains above the 2,770-point mark, despite hopes of a respite come Friday.
A positive global forecast for Asian markets is underway, with speculation that the extensive selling earlier in the week was excessive. Although the European market was weak, the U.S. market was strong, and it's expected that Asian markets will take a cue from the latter.
The ongoing decline on Thursday was noted by the Shanghai Composite Index (SCI) due primarily to losses from financial shares, property stocks, as well as resource and energy companies. The index fell by 17.81 points or 0.64 percent to a close of 2,770.74 after fluctuating between 2,752.78 and 2,805.01. The Shenzhen Composite Index took a hit as well, losing 7.15 points or 0.46 percent to close at 1,537.75.
Several key agents contributing to this downward trend included Industrial and Commercial Bank of China, Bank of China, China Construction Bank, and China Merchants Bank. Energy and property sectors also experienced a setback with players like Jiangxi Copper, Aluminum Corp of China (Chalco), Yankuang Energy, PetroChina, China Shenhua Energy, Gemdale, Poly Developments, China Vanke, and Haitong Securities all reporting losses.
Wall Street, on the other hand, seemed optimistic. The major market averages opened slightly higher on Thursday and gained momentum throughout the day, culminating near their session highs. With the Dow rallying 369.54 points (an uptick of 0.97 percent) and the NASDAQ jumping 197.63 points (a 1.3 percent rise), the U.S. market demonstrated significant resilience.
The Federal Reserve's indication that a March interest rate cut is unlikely prompted traders to buy stocks at lower levels following Wednesday's selloff. The bond market also played its role, with a continued drop in treasury yields prompting buying interest. The yield on the benchmark 10-year note fell to a record month-low.
In terms of U.S. economic data, an unexpected rise in first-time claims for U.S. unemployment benefits was reported last week by the Labor Department. Moreover, the Institute for Supply Management cited an increase in U.S. manufacturing activity in January, despite continued contraction.
Despite the optimism in the stock market, oil futures witnessed a downtrend on Thursday due to the ongoing cease-fire negotiations between Israel and Hamas. However, this was partially offset by potential projections of an increase in energy demand. Consequently, West Texas Intermediate Crude oil futures fell by $2.03 or 2.7 percent to $73.82 a barrel for March.
