Fin24 team
2019-04-29 08:45This year’s rally in Chinese shares is threatening to unravel almost as quickly as it began.
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China stocks fluctuate after worst week versus world since 2016
Bloomberg News
This year’s rally in Chinese shares is threatening to unravel almost as quickly as it began.The Shanghai Composite Index fell as much as 1.2% Monday, dropping below its 50-day moving average.
It eked out a 0.4% gain as of 13:49 local time. That follows its 5.6% slump last week, the worst performance versus global equities since early 2016. The ChiNext Index fell as much as 2.5%.
China was the best place in the world for equity investors in the first quarter, with all its major benchmarks entering a bull market and volume surging. The rally has lost momentum amid a lackluster earnings season, while better-than-expected economic data prompted investors to scale back their expectations for additional stimulus.
Data on manufacturing growth for April is due on Tuesday.
“The market needs to drop more to fully price in the expectations that China might tighten its monetary policy,” said Zhang Gang, a Shanghai-based strategist with Central China Securities. “Poor corporate earnings hurt confidence and profit taking in stocks that had reaped strong gains added to the selling.”
Traders have been taking profit from some of the year’s biggest winners, including brokers, 5G-related stocks and firms on the tech-heavy ChiNext Index. Eastern Communications, a maker of mobile communication products, has fallen nearly 40% from its March peak after surging more than 250% this year.
Mainland markets will be shut from Wednesday for a three-day break. While northbound trading remains open through Tuesday, investors in China are unable to trade Hong Kong stocks through the exchange links until May 6.
Volume on the Hang Seng Index, which rose 0.8%, was about 33% lower than the 30-day average for this time of day.
Brokerages fell as investors worried trading volumes in the country’s stock market may slide, with Northeast Securities and SooChow Securities declining. A gauge of brokers is down about 5% in April, paring its gain this year to 48%.
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Asian stocks start week mixed after fresh US highs
Adam Haigh, Bloomberg
Stocks in Asia were mixed at the start of a week that’s packed with data releases that may provide clues on global economic growth. Volumes are likely to be down with Japanese markets shut for holidays.
Shares in South Korea, Hong Kong and China climbed, while Australian equities dipped. US stocks climbed Friday and the S&P 500 Index reached an all-time high amid a flurry of earnings reports. European futures were higher.
The euro was steady as Spain’s incumbent Socialist Prime Minister Pedro Sanchez was set to be re-elected, as widely expected.
Investors this week get a chance to gauge whether the recent soft patch in the world economy will linger, with data out from the US, Europe and China.
Underlying demand was softer than the headline number indicated in the US Friday, though some investors took comfort in the not-too-hot, not-too-cold first-quarter gross domestic product report.
Earnings season also rolls on, with five of China’s biggest banks due to report Monday. Next comes the US inflation report Monday.
Any softness would play into the hands of investors betting on a Federal Reserve interest rate reduction this year, with market pricing now indicating a more than 50 percent chance of a cut by September.
Traders will also continue to monitor high-level trade talks between China and the US for any signs of progress toward a more concrete deal.
Elsewhere, Treasury futures were flat, with the cash market shut until the London open due to Tokyo holidays.
Oil extended its slide following US President Donald Trump’s move to pressure OPEC to cut prices and as doubts grew about the impact of supply squeezes from Russia and Iran.
https://www.fin24.com/Markets/markets-live-asian-stocks-start-week-mixed-after-fresh-us-highs-20190429
2019-04-29 06:45:00Z
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