Shanghai Composite down on worries of government-imposed correction

Most European markets were higher on the session Friday. The FTSE Eurofirst 300 gained 0.51 percent to 1,580.75. The CAC-40 in Paris added 0.63 percent to 6,050.63, while in Frankfurt the Dax was up 0.86 percent to 7,479.34. The London markets were mixed, however, with the FTSE 100 up 0 .64 percent to 6,565.7 but the FTSE 250 down 0.24 percent to 12,033.8. Banks were higher on the continent, and losers included builders and hotels operators. In London, miners were up after a volatile week on renewed consolidation rumors within the sector. Utilities and publishers were also helped by bids talk.

In contrast, most equities markets in Asia and the Pacific were lower during the day. The main exception was the Sensex, which added 0.18 percent to 13,796.16 in India. The Straits Times index in Singapore dropped 0.07 percent to 3,466.92, while in Hong Kong the Hang Seng Index fell 1.34 percent to 20,468.21. Meanwhile in Australia, the Sydney Ordinaries were down 0.86 percent to 6,297.3. In China, the Shanghai Composite was 0.7 percent lower to 4,021.68 on fears that recent advances could prompt a correction from the Chinese government. The market there has added around 300 percent in less than two years, and trade volumes are up significantly. The government could do several things to attempt to cool the market down, including raising interest rates, introducing a capital gains tax on stock sales, or encourage large companies to step up listing plans.

The Tokyo markets closed lower on broker downgrades, profit forecasts that disappointed investors, and overnight weakness on Wall Street. The Nikkei 225 dropped 1 percent to 17,553.72, while the Topix index fell 0.8 percent to 1,723.09. Export sectors, including electronics and construction equipment, were generally down.

Wall Street was helped by the Labor Department released new producer price index data that hinted at a moderation of inflation, which increased investor confidence by raising hopes that the Federal Reserve won’t hike interest rates and might even lower them. At midday, the Dow Jones Industrial Average was 0.69 percent higher to 13,306.88, while the Nasdaq Composite added 0.84 percent to 2,554.91 and the S&P 500 was up 0.74 percent to 1,502.74. The Russell 2000 index of small and mid-caps gained 0.95 percent to 826.4. The telecommunications sector saw gains, while there were reports of significant profits gains among insurers. Exchanges were sent higher on bids maneuvering. Fast food saw gains on a possible sale.

Story link: Shanghai Composite down on worries of government-imposed correction