April 6, 2010 (Chinavestor) European markets rallied today on strong U.S. market sentiment while Shanghai was hanging on to last week's record gains. The Shanghai Composite Index (SHA:000001) slipped in the red during the afternoon trading session but managed to eke out a +0.72 points or +0.02% gain by the end of the day. Trading in Hong Kong will reopen on Wednesday.
Chinese financial institutions, coal miners, shipping companies advanced while real estate stocks declined. Strong corporate earnings, signs that the global economic recovery is on track helped resource and metal stocks. China will release March export numbers on April 10, most likely showing a four straight months of increase. Jiangxi Copper (SHA:600362), the largest producer of the metal, advanced +1.3%. China Shenhua (SHA:601088), the largest Chinese coal miner, rose 1.1% just as did China Coal (SHA:601899). Shares of China Cosco (SHA:601919), the largest container shipping company in the world, advanced +0.9%.
But real estate developers fell after influential newspapers called for a correction in excessive land prices and a special tax levy on developers. Shares of Poly Real Estate (SHA:600048) fell -3.6%, the most among the 50 largest Chinese listed companies listed in Shanghai.
Index futures point to a lower open for U.S. indices ahead the bell - the rally has to take a breather. Chinese ADRs have been participating in the broad rally, evidenced by the significant increase in the number of Chinese stocks trading above their 20-DMA and 50-DMA. The good news is that the number of overbought China stocks, though on the rise, is not excessive. On the earnings front we have Sinovac Biotech (NASDAQ:SVA) to report at 9:00 A.M. this morning.
Hong Kong will reopen on Wednesday and is expected to catch up with the rest of the world tomorrow. The global shipping ETF is behind the rest of the market, expect NYSE:SEA to outperform the market on Tuesday. T-bills have been very strong as expectations run high that the Chinese trade surplus will shrink leaving China with less money to spend on U.S. debt, forcing the yield to raise to keep China buying Treasuries. Oil is at the $85 range though is far from being overbought - more upside is possible.