FX.co ★ China Bourse May Remain Rangebound On Tuesday

The China stock market has demonstrated an upward trend in two out of the last three trading sessions following a brief period of decline, during which it experienced a drop of over 55 points or 1.7%. Currently, the Shanghai Composite Index stands slightly above the 3,310 mark, although it anticipates a subdued opening on Tuesday.

Globally, the outlook for Asian markets is subdued, largely due to the impending U.S. presidential election and the Federal Reserve's rate decision this week. Both European and U.S. markets have exhibited downward trends, and it is expected that Asian markets will follow suit. On Monday, the SCI posted a significant gain, largely driven by financial and insurance sectors, despite some weakness in real estate and oil stocks. Specifically, the index rose by 38.19 points, or 1.17%, concluding the day at its peak of 3,310.21, having dipped as low as 3,263.84 during the session. The Shenzhen Composite Index also showed robust growth, climbing by 38.38 points or 1.97% to close at 1,984.22.

In terms of individual stocks, Industrial and Commercial Bank of China decreased by 0.33%, while Bank of China and China Construction Bank saw increases of 0.20% and 0.25%, respectively. China Merchants Bank surged by 1.95%, China Life Insurance improved by 0.68%, and Jiangxi Copper by 0.48%. However, Aluminum Corp of China (Chalco) dipped by 0.25%. Elsewhere, Yankuang Energy rose by 0.83%, PetroChina fell by 1.20%, and China Petroleum and Chemical (Sinopec) declined by 0.64%. Meanwhile, Huaneng Power edged up by 0.14%, China Shenhua Energy reduced by 0.78%, while Gemdale, Poly Developments, and China Vanke experienced losses of 3.75%, 0.55%, and 0.44%, respectively. Agricultural Bank of China remained unchanged.

On Wall Street, there was a subdued lead as major indices started the week lower, hovered around the baseline for most of the day, and finished in negative territory. The Dow Jones Industrial Average fell by 257.59 points or 0.61% to settle at 41,794.60, the NASDAQ dropped by 59.93 points or 0.33% to close at 18,179.98, and the S&P 500 declined by 16.11 points or 0.28% finishing at 5,712.69.

Monday's tepid trading was primarily attributed to traders being cautious ahead of the U.S. elections set for Tuesday, where Vice President Kamala Harris is contesting against former President Donald Trump. With polls reflecting a close race, the definitive outcome might not be clear on Election Day.

Additionally, traders are anticipating the Federal Reserve's forthcoming monetary policy decision slated for announcement on Thursday. The central bank is broadly expected to cut interest rates by another 25 basis points, with traders closely analyzing the accompanying statement for any indication of further potential rate reductions.

Oil prices witnessed a sharp increase on Monday, spurred by OPEC's postponement of production hikes and escalating tensions in the Middle East. West Texas Intermediate crude oil futures for December rose significantly, closing up by $1.98 or about 2.85% at $71.47 per barrel, marking a fourth consecutive session of gains.

Closer to home, China's anticipated services PMI for October, expected to be released by Caixin later this morning, is projected by analysts to rise slightly to 50.5, up from 50.3 in September.