China Stock Market Tipped To End Losing Streak

The China stock market has finished lower in two straight sessions, sinking nearly 35 points or 1 percent along the way. The Shanghai Composite Index now rests just above the 3,645-point plateau although it's due for support on Thursday.

The global forecast for the Asian markets is upbeat following results of the FOMC's monetary policy meeting. The European and U.S. markets were solidly higher and the Asian bourses figure to open in similar fashion.

The SCI finished modestly lower on Wednesday following losses from the financials and oil companies, while the energy companies and properties were up.

For the day, the index shed 13.89 points or 0.38 percent to finish at 3,647.63 after trading between 3,645.24 and 3,668.40. The Shenzhen Composite Index dropped 14.75 points or 0.58 percent to end at 2,543.49.

Among the actives, Industrial and Commercial Bank of China fell 0.22 percent, while China Merchants Bank dipped 0.29 percent, Bank of Communications lost 0.44 percent, China Life Insurance dropped 0.83 percent, Jiangxi Copper shed 0.39 percent, Aluminum Corp of China (Chalco) skidded 1.15 percent, Yanzhou Coal skyrocketed by the 10 percent daily limit, PetroChina sank 0.62 percent, China Petroleum and Chemical (Sinopec) slid 0.24 percent, Huaneng Power surged 7.13 percent, China Shenhua Energy added 0.61 percent, Poly Developments rallied 2.07 percent, China Vanke gained 0.56 percent, Beijing Capital Development rose 0.36 percent and Bank of China, China Construction Bank, China Minsheng Bank and Gemdale were unchanged.

The lead from Wall Street is broadly positive as the major averages opened slightly lower on Wednesday but then surged in the afternoon to finish sharply higher.

The Dow soared 383.25 points or 1.08 percent to finish at 35,927.43, while the NASDAQ spiked 327.94 points or 2.15 percent to end at 15,565.58 and the S&P 500 jumped 75.76 points or 1.63 percent to close at 4,709.85.

The late-day rally on Wall Street came after the Fed announced its widely expected decision to accelerate the pace of reductions to its asset purchases program. Citing inflation developments and further improvement in the labor market, the Fed said it has decided to reduce the monthly pace of its net asset purchases by $30 billion per month, double the previously announced $15 billion per month.

The Fed said it expects similar reductions in the pace of net asset purchases will likely be appropriate each month, pointing to an end to the program next March. Analysts partly attributed the subsequent rally to relief that the Fed was not more aggressive in accelerating the timetable for halting its asset purchases.

Meanwhile, the Fed also announced its widely expected decision to keep the target range for the federal funds rate at zero to 0.25 percent. The central bank's latest projections forecast as many three rate hikes in 2022 compared to the lone rate hike forecast in September.

Despite the prospect of sooner than expected rate hikes, analysts suggested traders were pleased with the increased level of certainty provided by the Fed's latest projections.

Crude oil futures settled higher on Wednesday after the Energy Information Administration (EIA) said crude inventories in the U.S. dropped by 4.6 million barrels last week. West Texas Intermediate crude oil futures for January ended up by $0.14 or 0.2 percent at $70.87 a barrel.

Market Analysis