RELIEF
China Stocks Follow Wall Street Rebound
Jason Lee/Reuters
Futures indicated an opening gain for the S&P 500 of 14 points, or 0.7%, to 1952 after U.S. stocks snapped a six-day losing streak Wednesday. Dow industrials futures pointed to a 0.9% gain. Changes in futures, however, don’t necessarily accurately reflect moves after the opening bell.
The Stoxx Europe 600 was 2.5% higher and Germany’s DAX had advanced 2.7% around midway through the session. The Shanghai Composite Index led Asian markets higher, closing up 5.3% after five consecutive days of losses.
“It certainly looks calmer but it’s hard to know how sustainable these moves are,” said Patrik Schöwitz, a global multiasset strategist at J.P. Morgan Asset Management, which has around $1.8 trillion under management globally.
“It’s definitely too early to say that the latest bout of volatility is over,” he said.
Strategists at Rabobank said in a note to clients that markets were in a “fragile equilibrium.”
Central bankers helped to kickstart the rally.
An investor looks at an electronic board showing stock information at a brokerage house in Beijing on Thursday. Photo: Reuters Federal Reserve Bank of New York President William Dudley said Wednesday that the case for a September rate increase has grown “less compelling” given the turmoil in markets around the world, reassuring investors who may have been concerned that higher rates would put additional strain on markets at a volatile time.
Ultralow interest rates since the global financial crisis have sent stocks sharply higher.
A handful of economic data releases from the U.S. Wednesday, including a rise in new orders for durable goods, reassured investors that U.S. growth remains healthy even as China’s expansion slows.
“Markets have for days been looking for some sort of positive cue and they seemed to get that from Dudley and the data, but it remains to be seen how long that shot in the arm will last,” said Paul Markham, an equity investor at asset manager Newton, which has $75.9 billion under management.
Also Wednesday, European Central Bank chief economist Peter Praet said the risks of an extended period of very low inflation in Europe have intensified, which analysts said raised the chances of the central bank ramping up its stimulus.
The central bankers’ comments came after China cut interest rates and flooded its banking system with new liquidity late Tuesday amid the stock rout.
Investors will be watching for more clues from policy makers later Thursday when a conference of central bankers from around the world begins in Jackson Hole, Wyo.
However, anyone hoping the event will shed more light on the likely path and timing of a U.S. rate rise could be disappointed, said Luke Bartholomew, a fixed income investor at Aberdeen Asset Management, which has around $483 billion under management.Also Wednesday, European Central Bank chief economist Peter Praet said the risks of an extended period of very low inflation in Europe have intensified, which analysts said raised the chances of the central bank ramping up its stimulus.
The central bankers’ comments came after China cut interest rates and flooded its banking system with new liquidity late Tuesday amid the stock rout.
Investors will be watching for more clues from policy makers later Thursday when a conference of central bankers from around the world begins in Jackson Hole, Wyo.
“The Fed really doesn’t want to pin itself down to any particular date in the future because it needs to keep an eye on the economic data coming in and movements in financial markets,” he said.
Emerging-market currencies that had fallen sharply earlier in the week regained some footing Thursday, helped by a rise in the price of oil.
The Russian ruble, the Turkish lira and the South African rand all rose against the U.S. dollar. The Malaysian ringgit also rose against the buck after hitting fresh 17-year lows for the past five sessions.
The euro fell 0.4% against the dollar to $1.1293. The dollar was steady against Japan’s yen at around ¥120.16.
U.S. 10-year Treasury yields fell slightly as investors pulled back from the haven asset. The 10-year yield was recently down around 0.02 percentage point at 2.163%. Yields fall as bond prices rise.
Brent crude was recently 3.8% higher at $44.92 a barrel. The price of the commodity fell Wednesday after U.S. stockpile data showed a surprise drop in gasoline demand and record supplies of crude oil and petroleum products.
Write to Josie Cox at josie.cox@wsj.com
