So a cautious start to markets today with all eyes again on how Shanghai starts trading later this morning.
Our market will start with a small gain of around 12 points for the ASX 200, but a dip into the red wouldn’t surprise after Wall Street’s gains on Friday petered out (again) as the session came to an end.
Comments at the weekend by Fed Vice Chair Stanley Fischer about US monetary policy – watch the September 16-17 meeting of the central bank which will dominate market thinking from today onwards.
Fischer didn’t rule a rate rise in or out, but made the point that inflation would eventually move back to the Fed’s 2% target level and that the central bank had to move before that happened.
He also made the point in earlier comments that there was still plenty of time for markets to calm down before the Fed meeting as he tried to cool speculation that the market turmoil would force the Fed to postpone the long-awaited rate rise at next month’s meeting.
And tomorrow’s release of manufacturing surveys for China will also have a major influence on markets.
Despite the strong turnaround late in the week, Chinese shares still fell 7.9% over the week and Japanese shares lost 1.5%.
But US and Australian shares gained 0.9% and Eurozone shares rose 1.2%.
Commodities rebounded sharply on Thursday and Friday with metals (copper and zinc) and oil up over the week. But gold had its first weekly fall in a month.
The bounce in share markets also saw bond yields rise and the $A recover partially from a low of $US0.7050 early in the week. It ended at 71.73 US cents early Saturday morning.
The AMP’s chief economist Dr Shane Oliver says that from this year’s highs to their lows in the past week, major share markets have now had the following falls: Chinese shares -43%, Asian shares (ex Japan) -23%, emerging markets -22%, Eurozone shares -18%, Australian shares -16%, Japanese shares -15% and US shares -13%.
Australian shares are still down around 7.5% for August.
Meanwhile US markets ended a very volatile week on a weak note (and little changed on the day) after another day of wide swings.
Traders said the markets spent most of Friday’s session diving in and out of negative territory, as investors seemed undecided on how to interpret current events and comments from the state of China, to comments from Fed officials, to the surprisingly good US economic data.
The Dow, which suffered a 1,000 point loss in a matter of minutes on Monday, traded in a 120-point range on Friday, and ended down 11.76 points, or less than 0.1% at 16,643.01. The Dow was up 1.1% over the week.
The S&P 500 closed about a point higher at 1,988.87. Most of the gains came from a rally in the energy sector, thanks to that big jump in oil prices which continued on Friday. The index was up 0.9% for the week.
And the Nasdaq Composite ended the day up 15.62 points, or 0.3% at 4,828.32, and rose 2.6% over the week as investors returned to tech favourites like Apple, Netflix and Amazon.
Chinese stocks wrapped up a disorderly week with a strong two-day finish on Thursday and Friday, but was still almost 8% down over the week.
The Shanghai Composite closed 4.8% higher on Friday, thanks to another late-day rally. China’s markets will be closed on September 3 and 4 for national holidays.
The ASX 200 index and the All Ordinaries index both closed up 0.6% for the day and 0.9% higher for the week, at 5263.6 and 5274.7 respectively.
