Global markets stabilize; US indexes open higher on earnings

Market volatility represents the “most severe crisis” facing President Xi Jinping since he came to power, as investors vented their anger at the Communist Party, some analysts say.

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BEAR MARKET ENERGY: As markets closed, the price of U.S. benchmark crude oil was up 31 cents at $47.70 a barrel on the New York Mercantile Exchange. The carmaker said profits jumped 44 percent in the second quarter, helped by higher global sales and higher prices for premium trucks and SUVs.

“We appear to still have all three issues on the horizon”, he said. The benchmark Shanghai Composite Index dropped 345.35 points to close at 3,725.56 points on Monday, while the Shenzhen Component Index fell by 1,025.46 points, or 7.59 per cent, to 12,493.05 points.

In fact we expanded on that conundrum in this post discussing the exposure of U.S. automakers to the Chinese slowdown … Singapore is down 2.66 per cent, Malaysia is off 3.03 per cent, Thailand is down 5.07 per cent and Jakarta has shed 10.07 per cent. It was followed by CNOOC Ltd and AIA, which were up 2.7 percent.

This week’s turbulence shattered three weeks of relative calm for Chinese equities, secured through heavy government intervention to arrest a precipitous sell-off in late June and early July that wiped as much as $4 trillion off share values.

Tuesday saw markets swing wildly between gains and losses following a precipitous 8 drop on Monday. “In addition, the recent economic data shows it still takes time for the economy to recover from its sluggishness”.

The precipitous rise and fall of the Chinese stock market has been one of the bigger topics of conversation for investors this summer. The index had fallen 2.2 per cent on Monday as the biggest one-day fall in eight years in the Shanghai Composite Index spilled over into global markets. Concerns about the level of borrowing to fund market positions have been magnified by the grey market – a loosely regulated network of state-owned commercial banks, trust companies, fund managers, and grassroots finance firms. The market was down 30% in the less than a month. The Shanghai composite index was up 3.44% and Hong Kong’s Hang Seng gained 0.47%. India’s Sensex declined 0.4 percent to 27,437.61.

Stocks fell broadly around the globe Monday, a reaction to a steep drop in the Chinese market overnight.

Meanwhile, the central bank injected 50 billion yuan (S$11 billion) into money markets to provide short-term liquidity.

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While expectations are for an increase in either September or December, Naeimi said the events in China and elsewhere would likely have an impact on policymakers’ decision-making.

UK-CHINA-MARKETS:China stocks edge down as intervention brings some stability