The turbulent run reflects mounting worries on Wall Street about the slowdown in China, plunging oil prices and the implications for USA corporations.
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The markets was also helped by comments from St. Louis Federal Reserve President James Bullard that the continued rout on global oil markets has caused a “worrisome” drop in USA inflation expectations that may make further rate hikes hard to justify.
SECTOR VIEW: The 10 sectors in the S&P 500 index rose, with energy notching the biggest gain, 3.3 per cent. Williams Cos. led the gainers, adding $1.76, or 12.9 per cent, to $15.41. While its crude oil imports in 2015 hit a record 6.71mn barrels per day, its fuel exports also hit an all-time high of 693,300 bpd as refiners had to look overseas to clinch sales.
Having been alarmed by a near five per cent slide in the yuan since August, investors globally appeared relieved by the stabilisation. The government had started the year with a target for 6% growth. “And the influences depend on the actual situation this year. we will continue to watch closely the changes in exchange rates and trade”.
However, analysts said that signs China had found its feet would not be met with the same euphoria as past year. “Of course, this could just be the calm before the storm which is why we may see investors proceed with caution in the next couple of days”. Consequently, news that shows a pick-up in Chinese exports should “steady the ship” and trigger a rebound in global stock valuations, at least in the short term. The data suggest a weakening in the yuan may be helping boost demand for Chinese products, providing welcome support for the slowing economy.
Even as Shanghai started to regain footing this fall, the government sent a chill through the financial community over the course of their interventions by detaining scores of brokerage executives and fund managers in an attempt to get to the root causes of selling.
The Shanghai Index dropped to its lowest level in more than a year today, closing down by 3.6% to 2,900.97. The Shanghai Composite yoyo’d in and out of negative territory and by mid-afternoon sank 2.4 per cent to 2,949.60. Stocks in Southeast Asia were mixed.
OIL PRICES: Crude oil prices tumbled overnight but bounced higher Wednesday in Asia.
Exports to Africa’s biggest single trading partner China, plummeted by 38 per cent in the year 2015.
Crude oil imports in 2015 rose 8.8 per cent to 334 million tonnes while that of iron ore climbed 2.2 per cent to 953 million tonnes.
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