China stocks surge in late trading to halt five-day rout

ASIA’S DAY: The Shanghai Composite Index posted its first gain in six days, bouncing back from losses that triggered worldwide selling and wiped almost 23 percent off its value over the past week.

Hong Kong’s Hang Seng Index ended 3.6 percent percent higher at 21,838.54.

The S&P 500 rose 72.90 points, or 3.9%, to 1940.51 while the Nasdaq Composite Index was up 191.05, or 4.2%, to 4697.54.

“Heavyweight stocks like banks and insurance companies helped pull up the (Shanghai) index, and it’s possibly China Securities Finance entering the market again to shore up stocks“, Zhang Gang, a strategist at Central China Securities in Shanghai, told Bloomberg News. Germany’s Dax closed 3.2% higher at 10,315 and France’s Cac was up 3.5%.

Hong Kong shares also jumped, after hints the US Federal Reserve would not raise interest rates yet sparked a rally on Wall Street following days of turmoil over China.

The gains came after Wall Street rocketed up Wednesday, when the Dow Jones industrial average soaring more than 600 points, or 4 percent.

Sentiment was aided by comments from New York Fed President William Dudley on Wednesday who had said the prospect of a September rate hike “seems less compelling” than it was only weeks ago.

“The equity market roller coaster continues”, said TrustNet analyst Tony Cross as Frankfurt, Paris and London were down between 0.25 per cent and one per cent in mid-afternoon trades after yesterday’s strong gains.

E-mini futures on the Standard & Poor’s 500 Index slipped 0.4 percent after the American equities gauge rose 2.4 percent on Thursday. The prospect of a rate increase had also alarmed global stock markets because it could draw investment funds out of emerging markets and back to the US.

The yuan edged up against the dollar on Thursday, buoyed by the rise in stocks, though the PBOC set the daily guidance rate, from which the spot rate can vary by up to 2 percent, at its lowest level since 2011.

Oil prices staged a rebound, rising 10% to $US42.56 a barrel in New York.

Analysts say the latest rate cut – the fifth since November – is not enough to reverse slowing growth with more aggressive measures required.

The crash was China stocks’ worst performance since 2007’s global financial crisis and eliminated what was left of 2015’s gains, which stood at over 50 percent in June.

Japan’s benchmark Nikkei 225 index climbed 3 percent to 19,124.85 after lackluster monthly data on inflation and household spending raised hopes of further stimulus. The euro climbed to $1.1261 from $1.1242. The dollar rose to 120.66 yen from Wednesday’s 121.31 yen. Benchmarks in Taiwan, Singapore, Bangkok and Jakarta also rose.

Outstanding margin loans – money investors borrow to buy stocks – stood at 1.16 trillion yuan ($181.07 billion) as of Tuesday, a 7 per cent drop from the previous day, and representing the sixth consecutive session of declines.