An Indonesian talks his mobile phone inside a monitoring room at the Indonesia Stock Exchange in Jakarta, Indonesia, Tuesday.
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The Euro Stoxx 50 index of eurozone bluechip stocks decreased by 1.44 percent, while the Stoxx Europe 50 index, which includes some major United Kingdom companies, lost 1.75 percent.
European markets had rebounded yesterday after China cut interest rates in an attempt to boost the flagging Chinese economy, which had sent markets into a tailspin on Monday. The Standard & Poor’s 500 index fell 25.60 points, or 1.4 percent, to 1,867.61. Pepco stock shed $4.26, or 15.1 percent, to $22.69.
And for a commodity driven economy like Canada’s, China’s slower growth means less demand for resources from one of its biggest customers, said BMO’s Lee.
Russ Koesterich, global chief investment strategist at BlackRock, said that the key takeaway for investors is that all of the selling has restored value in some areas of the market, particularly in Europe.
Having closed down on Tuesday, U.S. futures pointed to a positive start on Wall Street.
The S&P 500 is down 12 percent from its record close of 2,130.82 on May 21.
The Shanghai composite fell by 8.5%, its worst one-day performance since 2007.
Apple, one of the most heavily traded stocks during this week’s gut-churning turmoil, is up 2% premarket.
“But while this might help sentiment, it’s not enough to reverse the ongoing slowdown in China’s growth”.
It also increased the amount of money available for lending by reducing the minimum reserves banks are required to hold by 0.5%.
“The Chinese economy is going to be on this bumpy road for a while, and it will have ebbs and flows that will no doubt have a serious impact on the global economy“, said Kamel Mellahi, professor at the Warwick Business School.
Many investors remain anxious by signs of a Chinese economic slowdown and deflationary pressures resulting from Beijing’s devaluation of its yuan currency this month.
The global Monetary Fund, the World Bank and even the Chinese government have long known China needed to rebalance its economic model and “move towards consumption and towards sustainable manufacturing”, Tiberghien explained. The Fed isn’t expected to deliver a policy update until it wraps up a meeting of policymakers in mid-September.
European markets recovered nearly all their losses from Monday.
Meanwhile, the German Dax was 2.7% lower while the French CAC also slumped 3%.
But the FTSE 100 remains in “correction” territory, more than 10% off its all-time closing high of 7,104 back in April.
Earlier, China’s main stock index closed sharply lower for a fourth day. Although it posted an 11% rise in first-half pre-tax profit as revenue grew and announced four acquisitions, analysts noted concerns over the group’s emerging markets businesses.
A gauge of options prices on U.S. equities surged as much as 90 per cent Monday to touch the highest level since January 2009.
Brent oil was trading down 4.6 percent, at $43.36 a barrel.
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Natural gas and heating oil prices also rose, and wholesale gasoline dropped.
