Stock Market in China May Reverse Monday's Advances
Asian Markets Open Mixed Amidst Cautious Outlook and Inflationary Pressures
After a surprising July PPI increase in the U.S., indicating stronger inflationary pressures, Asian markets are expected to open mixed on Tuesday. The subdued hopes for rapid Fed easing and the resulting USD strength have led to a degree of cautiousness in equity markets.
The Hang Seng futures indicate a positive start for Hong Kong markets, reflecting some resilience despite the inflation-driven cautiousness in global markets. Chinese tech shares, including giants like Tencent, remain in focus with robust export data and positive earnings supporting sentiment in China’s stock market.
In mainland China, the Shanghai Composite Index (SCI) finished higher on Monday, adding 12.42 points or 0.34 percent to close at 3,647.55. Notable performances include the Shenzhen Composite Index, which jumped 31.57 points or 1.42 percent to end at 2,251.72. However, Ping An Insurance eased 0.12 percent, China Life Insurance sank 0.71 percent, and Aluminum Corp of China (Chalco) shed 0.40 percent. China Shenhua Energy was unchanged, Huaneng Power retreated 1.67 percent, Jiangxi Copper improved 0.80 percent, Poly Developments rose 0.25 percent, and China Vanke added 0.47 percent.
Meanwhile, the NASDAQ sank 64.62 points or 0.30 percent to close at 21,385.40, while the S&P 500 fell 16.00 points or 0.25 percent to end at 6,373.45. The Dow dropped 200.52 points or 0.45 percent to finish at 43,975.09.
In the energy sector, crude oil edged higher on Monday. West Texas Intermediate crude for September delivery closed at $64.05 per barrel, up $0.17 or 0.27 percent.
Regional trade tensions and tariff developments also underpin cautious market sentiment. Notably, Russia did not respond to the U.S. deadline to end its war with Ukraine or face sanctions.
In terms of monetary policy, the CME Group's FedWatch Tool is indicating an 86.5 percent chance of a quarter-point interest rate lowering by the Federal Reserve next month. However, specific performances of individual companies were not provided in this update.
Industrial and Commercial Bank of China slumped 1.16 percent, China Merchants Bank dropped 0.97 percent, while Gemdale spiked 2.34 percent.
Market participants are advised to stay nimble and monitor macro headlines, central bank announcements, and earnings releases closely for trading opportunities and risk management following U.S. inflation data. The broader Asia-Pacific region is balancing positive domestic fundamentals with external uncertainties from U.S. inflation and trade policies.
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