Global markets shook off their fears about Greece and rebounded yesterday and overnight – except for one – China.
Markets in Asia, Europe and the US all recovered their poise and rose – adding to the confidence was more confusion from Greek politicians, with the Prime Minister, Alexis Tsipras offering to accept the last deal from the eurozone, but that was rejected. The next move is Sunday’s national vote.
US markets finished higher overnight, gold and oil both fell sharply, the Aussie dollar fell back under 77 US cents to trade around 76.50 this morning in Asia and the local market looks like starting with a tiny loss, despite those gains in New York.
The S&P 500 closed up 14.31 points, or 0.7%, at 2,077.42, the Dow jumped 138.40 points, or 0.8%, to end at 17,757.91 and the Nasdaq added 26.26 points, or 0.7% to close at 5,013.12. All three indexes remain down about 1% for the week to date.
European markets gained across the board, despite fears about Greece continuing to reverberate.
But it’s China’s markets we should be keeping a close eye on as they stood out yesterday with another big sell-off.
The Shanghai Composite Index lost 5.2% after trading largely flat earlier in the day, while the smaller Shenzhen market lost 4.8% lower, after being up 2.4% earlier. The ChiNext board fell 3.5% after earlier gains of as much as 5.2%.
Those losses came late in the day, as they have been doing with increasingly frequency of late.
Tuesday’s late rebound, with the market up 5.5%, was wiped out as those government measurers to hep confidence, lost their power with investors a day later.
The continuing weakness in China’s economy was underlined on Wednesday with the HSBC/Markit survey of Chinese manufacturing falling to 49.4 compared with 49.2 a month earlier. The official government survey of manufacturing was unchanged at just over 50.
It’s not the damage China’s tanking markets might cause to ours and others in Asia – foreign investment in Chinese markets have been growing, but it’s small compared to the multi-trillion dollar value of the markets.
The real threat is the damage big losses could do to Chinese demand and financial stability in coming months.
