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Renewed Pressure Expected For China Shares

(RTTNews) – The China stock market has finished higher in two of three trading days since the end of the three-day losing streak in which it had retreated more than 80 points or 3.2 percent. The Shanghai Composite Index finished just below the 2,555-point plateau, but now investors are bracing for heavy losses when the market opens for business on Monday.

The global forecast for the Asian markets is decidedly negative, as they get their first chance to respond to disappointing U.S. jobs data. A decline in commodity prices adds to the cautious sentiment, as does weakness among the properties and oil companies. The European and U.S. markets finished sharply lower on Friday, and now the Asian markets are expected to follow suit.

The SCI finished flat on Friday as gains from the technology sector were wiped out by selling from the steel producers.

For the day, the index added 0.94 points or 0.04 percent to finish at 2,553.59 after trading between 2,527.87 and 2,556.97. The Shenzhen Composite Index gained 10.17 points or 1.0 percent to finish at 1,034.93.

Among the gainers, Anhui Wantong Technology, Shenzhen Das Intellitech, Shandong Inspur Software and Beijing Join-Cheer Software all surged by the 10 percent daily limit, as did Northeast Securities.

Finishing lower, Bank of China shed 1.6 percent, while China Construction Bank lost 0.6 percent, Zhongyuan Special Steel plunged 8.65 percent, Bayi Iron and Steel declined 2.89 percent and Daye Special Steel was down 2.25 percent.

The lead from Wall Street is heavily pessimistic as stocks saw significant losses to close out the week on Friday. Worries regarding the escalating European debt crisis weighed on investors, as did the prospects of growth in the U.S. labor market and the oil spill in the Gulf of Mexico. The major averages all closed firmly lower, with the Dow closing below the 10,000 level.

After seeing initial weakness, stocks sharpened their losses as the euro continued to fall amid fears of debt contagion within the European Union. The euro-zone currency fell as low as $1.1955 against the dollar earlier, its lowest level in over four years.

Worries about Hungarian debt spooked traders after the vice chairman of Hungary’s ruling Fidesz party indicated that the nation is facing a debt-crisis much akin to that of Greece. Spain and Portugal also remain areas of concern as the markets wait for the next shoe to drop.

In the U.S., anxieties over the labor market also drove stocks lower, as a jump in May employment reported by the Labor Department was largely attributed to the hiring of temporary census workers. The data showed that non-farm payroll employment increased by 431,000 jobs in May following an unrevised increase of 290,000 jobs in April. The job growth fell short of economist estimates for an increase of about 500,000 jobs.

While the increase in jobs in May marked the fastest pace of job growth since March of 2000, the increase was primarily due to the addition of 411,000 temporary employees to work on the census. At the same time, the private sector added only 41,000 jobs in May.

On the corporate front, BP remained in focus after the company was able to cap the well spilling oil into the Gulf of Mexico.

The major averages all saw additional losses in late-session dealing, closing near their worst levels of the day. The Dow plunged by 323.31 points or 3.2 percent to 9,931.97, the NASDAQ fell by 83.86 points or 3.6 percent to 2,219.17 and the S&P 500 slid by 37.5 points or 3.4 percent to 1,064.88.

With the drop, the major averages erased all of the gains registered earlier this week, seeing steep weekly losses. The Dow and the S&P 500 fell by 2 percent and 2.3 percent, respectively, while the NASDAQ declined by 1.7 percent for the week.

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