BackGlobal stocks up as China fears ease
Standard & Poor's 500 rises 0.9%, after a two-day rout of 3.8%
Premium
London/New York: The selloff in global stocks let up, with US equities poised to halt a two-day rout and Chinese shares finishing little changed in their last day of trading this week. The dollar rose and oil tumbled.
Stocks retreated worldwide the previous two days amid revived concern that a slowdown in China will hamper growth around the globe. Equities in Shanghai erased most of a 4.7% drop Wednesday, as state funds intervened to stabilize the market. With China stepping into the background for a two- day holiday, attention is turning to Friday’s US payrolls report as investors gauge the strength of the world’s largest economy and the timing of the Federal Reserve’s next policy move.
“China’s going to be closed the next few days and that means there won’t be this negative lead-in to markets in the morning so that will be a nice reprieve," Stephen Carl, principal and head equity trader at Williams Capital Group LP, said by phone. “The date for a potential rate raise is certainly going back and forth and with the recent volatility in the market and situation overseas, people don’t have much conviction on when it will be."
The Standard & Poor’s 500 Index rose 0.9% at 12:45 pm in New York, after a two-day rout of 3.8%. The Stoxx Europe 600 Index added 0.3%. West Texas Intermediate crude fell 1.6% after a US stockpiles report. The Bloomberg Dollar Spot Index gained 0.4%.
Friday’s jobs report from the world’s largest economy will provide the last major data point before Fed policy makers meet on 16-17 September. The ADP Research Institute said on Wednesday the US added more jobs in August, though the total was less than forecast. A separate report today indicated factory orders rose less than estimated in July.
Stocks
The S&P 500’s 3% rout Tuesday was its third-worst of 2015, behind 21 August and 24 August. The Chicago Board Options Exchange Volatility Index, which surged to twice its average level in the three years through July, fell 1.6% Wednesday.
Nine of the 10 main groups in the S&P 500 advanced today, with shares of industrial and technology companies pacing the gains. Energy producers slid. The Dow Jones Industrial Average jumped 166 points after plunging 469 points yesterday.
Concern that China will curb global growth heightened Tuesday after data pointed to weakness in Europe and the slowest factory expansion in the US in two years. Australia’s economy expanded at half the pace forecast by analysts, a report showed on Wednesday.
“China is still making people panic," said Teis Knuthsen, chief investment officer at Saxo Bank A/S’s private-banking unit in Hellerup, Denmark. “But many companies are starting to look very cheap now and the market will eventually find a support level, especially if the Fed doesn’t raise rates this month."
Europe’s Stoxx 600 index halted its own two-day rally, as health-care shares jumped. The equity measure is still 15% below the record it reached in April, sending its valuation to 15.3 times estimated profit, lower than US shares.
Emerging markets
The MSCI Emerging Markets Index slid 0.7%, dropping for a third day, as Malaysia’s index fell 1.2% and benchmark gauges in Saudi Arabia and Dubai lost at least 2%. Energy companies led declines.
While the Shanghai Composite Index climbed back from its intraday low on speculation state funds intervened to stabilized the market, it failed to rebound and ended the day 0.2% lower.
Malaysia’s ringgit and Russia’s ruble declined at least 0.8% as a gauge of 20 developing-nation currencies fell for a second day, losing 0.3%. South Africa’s rand headed for a record-low close and is down 5.8% in the past month as currencies of commodity-producing countries declined. Kenya’s shilling dropped to the lowest since October 2011 on Wednesday.
Currencies
The euro fell for the first time in three days as a report showed declining wholesale prices in the region, spurring expectations that the European Central Bank will put weakening the currency back in the spotlight when it meets Thursday. The dollar strengthened 0.7% to $1.1241 per euro.
Bonds
Benchmark 10-year yields will climb to 3.1% by the end of 2016 from about 2.18% Wednesday, based on Bloomberg surveys of economists with the most recent forecasts given the heaviest weightings. The projection has fallen from 3.30% as recently as July.
Germany’s government bonds rose Wednesday before the ECB’s decision on monetary policy. The 10-year bund yield declined one basis point to 0.79%. Traders are looking to Mario Draghi for signs the central bank will act to counter deflationary pressures from falling commodity prices and rising yields.
Corporate-debt sales picked up after a seasonal slowdown in August. Toyota Motor Credit Corp., Bank of Nova Scotia and Erste Group Bank AG were among companies marketing euro-denominated bonds, according to people familiar with the sales, who asked not to be identified as they aren’t authorized to to speak publicly.
Commodities
West Texas Intermediate crude slipped to $44.55 a barrel, after falling 7.7% on Tuesday. Brent prices in London added 0.5% to $49.95. Stockpiles rose 4.67 million barrels last week, the most since April, according to the Energy Information Administration. A 900,000-barrel gain was projected by analysts surveyed by Bloomberg.
Gold held near the highest in a week as investors sought a haven from recent equity declines sparked by concerns of a deepening slowdown in China. Bullion futures for December delivery were little changed at $1,138.70 an ounce.
Arabica coffee futures slid to a 19-month low, tin advanced a third day and rubber dropped to the lowest in a week. Bloomberg
--With assistance from Adam Haigh in Sydney, Lianting Tu and Nick Gentle in Hong Kong, Sofia Horta e Costa in Lisbon, Cecile Vannucci, Andrew Reierson and Neil Denslow in London, Oliver Renick in New York and Emma O’Brien in Wellington.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!
