The government has in recent months rolled out a flurry of steps to try to put a floor under the economy, including repeated cuts in interest rates and bank reserve requirement and faster infrastructure spending.
Many traders believe that the sell off in copper prices came amid growing concerns over China’s slowing economy and worries that Beijing may allow the yuan to depreciate even further leading to speculations for a currency war which many believe could destabilize the global economy.
“Currently, there is still downward pressure on China’s economic growth“, the central bank said in a separate statement.
Brendan Ahern, the portfolio manager of KraneShares, said that the U.S. equity markets have done exceedingly well without a significant correction which has been overdue.
According to Business Insider, the report, which lowered China’s Purchasing Managers’ Index to 47.1 compared to the expected value of 47.7, is a 77 month low for China.
European markets recovered nearly all their losses from Monday, with most rising at least 4 percent, while U.S. stocks were expected to open higher and oil prices traded higher. Meanwhile, the S&P 500 fell below 2,000 for the first time since January and the NASDAQ also fell by 3 percent.
Tokyo’s Nikkei 225 earlier closed down 4 percent after sliding 4.6 percent Monday.
“I think it’s important that people don’t hyperventilate about these types of things”, said Australian Prime Minister Tony Abbott, whose country is heavily exposed to China, the biggest consumer of its commodity exports. “Beijing has released some positive signals and these will help global stock markets”.
The Chinese Communist Party Central Committee will meet this fall to approve its five-year plan for 2016 to 2020.
After a year of heady gains, Chinese markets have been buffeted by increasing signs that economic growth is faltering, and the central government’s efforts to reassure and backstop stock investors have been sunk by a succession of weakening indicators.
“Indications are that what we get out of China is that the economy is not decelerating so much to justify the rout in the stock market“, he told journalists on the sidelines of a conference.
“The current panic is essentially “made in China”. That’s because China still runs a relatively low budget deficit, compared to other major economies.
Chinese authorities have, over the course of the year as growth has continued to slow, been putting into place a number of economic stimulus measures to boost growth.
Some companies, too, have sought to reassure investors that China’s economy is not about to go over the cliff, with Apple Inc CEO Tim Cook and planemaker Boeing Co making encouraging noises about China on Tuesday.