Global Stocks Try to Regain Footing -- Update
September 02 2015 - 6:25AM
Dow Jones News
By Josie Cox
Global stock markets steadied Wednesday, a day after a fresh
jolt from China triggered steep losses.
Financial markets have endured a roller-coaster ride since China
moved to devalue the yuan in mid-August. Commodities and stocks
indexes around the world suffered some of their worst declines in
years last month, and September has offered limited relief.
On Tuesday, weak manufacturing data out of China reignited a
global selloff on concerns about the effects of slowing growth in
the world's second-largest economy.
Futures contracts pointed to a 0.4% opening gain for the Dow
Jones Industrial Average and a 0.3% rise for the S&P 500 on
Wednesday. Futures, however, don't always accurately reflect moves
after the opening bell.
The Stoxx Europe 600 was down 0.5% after falling 2.7% Tuesday.
Most Asian markets slumped in early trade, though some recovered
later in the session.
The Shanghai Composite Index ended 0.2% lower after mainland
brokerages were suspected of plowing cash into the market at
Beijing's direction. Analysts said that authorities in China may
have wanted to cheer up domestic investors ahead of a two-day
celebration in the capital commemorating the end of World War
II.
The Shanghai Composite, which has been at the center of the
global selloff, has lost nearly 14% of its value since this time
last month despite authorities' efforts to stem losses. China's
central bank last month cut interest rates for the fifth time since
November and Beijing has intervened to prop up the market.
In Hong Kong, the Hang Seng Index finished 1.2% lower, while
Japan's Nikkei ended the day down 0.4% Wednesday.
The Dow tumbled 2.8% Tuesday, its biggest one-day percentage
loss since Aug. 24, when it fell nearly 600 points, or 3.6%.
"All those who stuck to the adage 'sell in May and go away' must
have come back and started to sell again straight away," said
Michael Every, head of financial markets research for the
Asia-Pacific region at Rabobank, in a note to clients.
The recent market turmoil has led some analysts to question when
the U.S. Federal Reserve will start to raise interest rates from
rock-bottom levels.
"Our view overall is that the global financial system is so
fragile and the global economy so lethargic...that it near forces
central banks into a continuation of easy monetary conditions,"
which includes keeping interest rates low, Jim Reid, a strategist
at Deutsche Bank, wrote in a note to clients.
He added that the situation is still highly uncertain.
Others were more upbeat.
"Broad economic indicators are still reasonably positive," said
Peter Fitzgerald, senior fund manager at Aviva Investors.
He said that he still thinks the Fed will raise rates in
September and that the central bank needs to be very careful not to
let shorter-term market moves "dictate longer term monetary
policy."
Oil prices continued to fall. Brent crude fell 1.5% to $48.82 a
barrel, having already fallen sharply on Tuesday. The oil market is
more volatile than it has been in years. Both the U.S. and global
oil benchmarks rose sharply in the three days ended Monday.
The euro was recently around 0.2% lower against the U.S. dollar
at $1.1276. The dollar was 0.1% higher against Japan's yen at
Yen119.80.
--Chao Deng in Hong Kong contributed to this article.
Write to Josie Cox at josie.cox@wsj.com
(END) Dow Jones Newswires
September 02, 2015 06:10 ET (10:10 GMT)
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