European and Asians stock markets chased Wall Street higher yesterday after days of wild swings, but dealers warned that the specter of the slowing Chinese economy means more turbulence ahead.
In late-morning deals yesterday, the Frankfurt and Paris stock exchanges rebounded by more than 3 percent and London gained more than 2 percent.
“European equities are trading higher, receiving a boost from firmer markets overnight in the US and Asia,” Peregrine & Black analyst Markus Huber said.
“For now there is quite a bit of relief that stocks in China are finally staging a moderate and long-awaited bounce back,” he said.
Asian equities took their cue from Wall Street yesterday, rallying after several tumultuous days, but dealers cautioned that enduring concerns about Chinese economic slowing would spell more volatility.
Shanghai soared 5.34 percent to 3,083.59 points, ending the worst five-day rout in almost two decades. Shares in Shenzhen, which tracks stocks on China’s second exchange, jumped 3.33 percent to 1,752.21 points.
“There were external funds flowing in, but it’s uncertain if it was the national team,” Shenwan Hongyuan Securities Co (申萬宏源證券) analyst Gui Haoming (桂浩明) said, referring to entities which trade on behalf of the Chinese government.
Qian Qimin (錢啟敏), also of Shenwan Hongyuan, added investors were “expecting pension funds will enter the market.”
Taiwanese shares rose 1.41 percent to 7,824.55. Hong Kong shares also jumped yesterday, with the benchmark Hang Seng Index adding 3.6 percent to close at 21,838.54.
“After the recent sell-off, the local equity market simply staged a technical rebound today by seizing the gains posted on Wall Street overnight as a cause to buy,” Taipei-based Concord Securities (康和證券) analyst Kerry Huang said.
“The electronics sector was in focus amid buying as many high-tech stocks had been oversold,” Huang added.
While the TAIEX closed above 7,800 points yesterday, whether the rebound is to continue depends on how Wall Street performs, Huang said.
“If the Chinese yuan turns stable, investor confidence in the global financial markets, including Wall Street, will recover accordingly, and the Taipei market will follow suit to move even higher,” he said.
Elsewhere in the Asian market, Tokyo gained 1.08 percent, Sydney added 1.17 percent and Seoul rose 0.73 percent.
New York snapped a six-day losing streak on Wednesday after the head of the New York branch of the US Federal Reserve, William Dudley, said China turmoil had weakened the argument for a rate hike next month.
The S&P 500 surged 3.9 percent, the Dow Jones Industrial Average added 3.95 percent and the NASDAQ Composite was up a heady 4.24 percent, with sentiment bolstered by upbeat US durable goods orders.
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