On Tuesday, after China’s week-long National holiday ended, sellers emerged to take advantage of the Shanghai stock market’s over 35% record-breaking rally.
The most heavily traded stocks selling off included JD (JD), Nio (NIO), Alibaba (BABA), and PDD (PDD). The FTSE China Bear 3X ETF (YANG) gained over 36%. Daily trading for YANG stock was 196.79 million, more than 10 times the average of 17.61 million.
China previously announced mortgage and lending interest rate cuts. Unfortunately, the mortgage down payment requirement applied only to second home purchases. The Chinese are unwilling to buy homes as prices continue to fall.
Energy Stocks Fall
Marathon Petroleum (MPC) lost 7.66% yesterday but could rebound today. Worries about tensions between Israel and Iran will resurface. This will lift oil prices and MPC stock. The stock must rally back to the $175 range to break its range-bound pattern. The stock is attractive at current levels with a non-GAAP P/E of 9.2 times.
Valero (VLO) is also offering investors good value. The P/E is 8.2 times, compared to the sector median of around 11 times. The U.S. economy is resilient. This will lead to strong wholesale gasoline sales. In addition, diesel sales will continue to increase. Although demand is weaker, jet demand strength is a tailwind.
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