China Falls Again but Other Asian Stocks, Europe Higher

– Kuala Lumpur’s main index rose 1.37 percent, or 23.22 points, to close the day on 1,723.14. The Nasdaq composite rose 17.05 points, or 0.3 percent, to 5,128.78. Margin debt surged fivefold over the preceding 12 months, propelling the Shanghai Composite to a 150 per cent advance.

“The market must generate a wealth effect so that investors can regain confidence”, Tang Yonggang, another analyst at Shenwan Hongyuan Securities, said adding that state-backed funds may be getting diverted to infrastructure and military stocks. In fact, both Qualcomm and Schlumberger did see their share prices drop in the days following China’s historic plunge, suggesting investors may well indeed perceive it as a threat to both company’s future earnings potential.

In a bid to end the market rout that wiped off one-third of its value since mid-June, the government has reduced the number of IPOs, banned short-selling and introduced a six-month ban on big shareholders selling stocks. The S&P/ASX 200 advanced 0.5 per cent, extending gains this month to 3.9 per cent. “With Greece out of the way and China not being such a big focus as it has been, we’re back to watching the economic data”, said Christopher Moltke-Leth, head of institutional client trading at Saxo Capital Markets in Singapore. But most American companies should suffer only minor financial damage, if any at all, and many have controls in place to quickly stop the bleeding if China’s stock market continues to plummet.

Commodities, battered by a stronger US dollar and worries about China’s slowdown, continued to slide.

The chances of an earlier rate rise lifted the dollar. Many materials are priced in the currency, making them more expensive for foreign buyers as the dollar strengthens.

The dollar fell and benchmark U.S. Treasury yields touched multi-week lows on Friday as an unexpectedly weak government reading of American labor costs dulled prospects for higher U.S. interest rates.

Gold has sank to five-year lows, and is now trading down 0.4% at $1083.70 a troy ounce in Asia.

On oil markets, US benchmark West Texas Intermediate for September delivery fell 58 cents to US$47.96 and Brent crude for September shed 35 cents to US$52.96 a barrel in afternoon trade.

Stocks elsewhere in the region were mixed, with the Nikkei Stock Average flat, as disappointing consumer-spending data offset a better-than-expected inflation reading.

Stocks of BP, Statoil, Anglo American and BHP Billiton tumbled 1.2% to 2.0%.

Bond prices rose after a report showed that U.S. wages and benefits grew in the spring at the slowest pace in 33 years.

China’s benchmark CSI300 index, which comprises the largest listed firms in Shanghai and Shenzhen, dipped in morning trade, though it is still up around 7 percent over what has been a roller-coaster 2015. The company has denied any wrongdoing. However, some local traders capitalized on the investors exodus from the mainland, and on Friday the Hang Seng only retreated some 0.1%, thus outperforming the Shanghai bourse.