Concerns about China’s slowdown in August helped spark a selloff in stocks around the world, and sharp swings continued through last month.
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European shares are expected to open flat to weaker, with spreadbetters looking to a 0.2 percent fall in Britain’s FTSE and France’s CAC 40 and a flat opening in Germany’s DAX.
MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.3%, while Japan’s Nikkei stock index shed 1.1%.
Although Schroeder is bearish over the medium-term prospects for Chinese stocks, he believes that mainland indices will stage a late rally in the final months of the year, fuelled by a bottoming in the crude oil price and rebound in emerging market currencies as a outcome of the US Federal Reserve’s decision to leave monetary policy unchanged at its September FOMC meeting.
While Beijing has generally refrained from launching widespread stimulus measures to boost slowing growth, it has resorted to a steady drip-feed of measures in recent weeks to support various sectors ranging from housing to autos, calming investor sentiment, and sparking a rally in the Hong Kong listed shares of Chinese companies. The broader All Ordinaries index slid 4.20 points or 0.08 percent to 5,230.4. Japan is shut for a holiday.
Shares of resource-related counters were the hardest-hit after a more than 5% tumble in crude oil prices overnight.
The widely-tracked VIX index, a volatility gauge of investor nervousness, was at its lowest since late August, a sign that optimism was returning to the markets after a tumultuous summer in which major indexes lost more than a quarter of their value.
“As oil starts to move and materials follow, investors will by default feel more positive about China”.
On Wall Street on Tuesday, stocks dropped, with the S&P 500 touching a fresh seven-week high before ending solidly down. Indeed, fed fund futures contracts were indicating a rate hike only in 2016. “I doubt 10-year Treasury yields will exceed 2.3% by year-end given ongoing fears that weaker emerging-market growth will spill over to developed economies”.
Strategists at Brown Brothers Harriman warned that technical levels warned of scope for additional dollar losses in coming sessions. The index was trading below 95, its lowest levels in a month, according to Thomson Reuters data.
This month, China has cut the purchase tax on vehicles with engines 1.6 liters or smaller by half to 5%, effective through the end of next year, and reduced the minimum down- payment requirements for first-time homebuyers. Dr. Peng Telecom & Media Group climbed 4.7 per cent while Suning Commerce Group, China’s biggest electronics retailer, rose 4.9 per cent.
Codelco, the world’s largest copper producer, also said it will have to rethink or delay expansion projects after lower metal prices weighed on its earnings.
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The dollar was about 0.1 per cent lower against the yen at 119.66 yen JPY=, while the euro added about 0.2 per cent to buy $1.1396 EUR= after rising to a 3 1/2-week high of $1.1411 overnight.
