China Market falls to assess trade talk progress

Capital Market 

Headline indices of the Mainland equity market were down after yesterday's mammoth gains on Tuesday, 26 February 2019, as investors booked profit after the country's securities regulator issued a statement advising on margin financing late Monday. At closing bell, the benchmark Shanghai Composite Index fell 0.67%, or 19.77 points, to 2,941.52. The Shenzhen Composite Index, which tracks stocks on China's second exchange, dropped 0.49%, or 7.57 points, to 1,549.71. The blue-chip CSI300 index sank 1.2%, or 44.79 points, to 3,684.69. Trading turnover totaled 1.07 trillion yuan ($160 billion), exceeding Monday's 1.04 trillion yuan and the highest level in more than three years.

Optimists hailed yesterday's nearly 6% jump in the blue-chip CSI300 Index the biggest one-day gain in three years after US said he will delay raising tariffs on Chinese goods on March 1, and that he would plan a summit meeting with Chinese at his Mar-a-Lago estate in to conclude an agreement, assuming the trade talks make additional progress.

Market paring its yesterday advance as U. S. said on Monday he was optimistic that a final trade deal could be reached with and that he would hold a summit to sign any pact, but cautioned that an agreement may still not happen.

Late on Monday, China's securities watchdog urged stricter monitoring of unusual stock trading after reports of increasing grey-market margin financing.

Traders are eyeing a slate of data due in the second half of the week for fresh cues on the health of the global economy, including from and the and revised US fourth quarter gross domestic product figures.

Investors are also looking for fresh cues on the Federal Reserve's latest view on the economy and monetary policy. Fed will testify before the later on Tuesday, in the first of a two-day appearance before lawmakers. Powell and other Fed policymakers have indicated they favour patience before raising key lending rates again due to recent signs of slowing economic growth and discussion of the central bank's balance sheet. The futures market implied traders bet the central would not raise interest rates at all in 2019.

CURRENCY NEWS: China's yuan retreated against the U. S. dollar on Tuesday, after surging to an over seven-month high in the previous session on hopes that and were edging closer to a deal to end their bitter trade war. Prior to the market opening on Tuesday, the of China set the midpoint rate at 6.6952 per dollar, the strongest level since July 18, 2018, and 179 pips or 0.27% firmer than the previous fix of 6.7131. In the spot market, the onshore spot yuan opened at 6.6950 per dollar and was changing hands at 6.6913, weaker by 36 pips than the previous late session close.

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First Published: Tue, February 26 2019. 14:30 IST