Wednesday 28 September 2016

US stocks reverse gains as investor rally fizzles out

Published 26/08/2015 | 02:30

Relief on the face of a trader at KBC bank at its headquarters in Brussels as European and American markets rallied after the misery of Black Monday. The joy was short-lived, however, as US stocks dropped gains made earlier in the day.
Relief on the face of a trader at KBC bank at its headquarters in Brussels as European and American markets rallied after the misery of Black Monday. The joy was short-lived, however, as US stocks dropped gains made earlier in the day.

US stocks dramatically reversed gains last night and closed with deep losses even after China cut interest rates in a bid to calm market jitters.

  • Go To

European stocks surged and closed up in the afternoon, partially recovering losses endured on 'Black Monday', and US stocks looked to be following suit.

But major indices turned negative in the final minutes of trading.

The Dow Jones fell 1.29pc and the S&P 500 lost 1.35pc amid fragile investor confidence.

Earlier, European shares enjoyed their biggest rebound in four years, clawing back some losses.

The ISEQ Overall Index closed up 4pc, its biggest one-day jump in more than five years.

The rebound was just as broad-based as Monday's slump, with almost all Stoxx 600 companies rising,

After the close of markets in Asia yesterday, and with Chinese stocks slumping again, Beijing opted to cut its main interest rate by 0.25 percentage points - its fifth rate cut since November - in a bid to eases international concerns.

US banking giant JP Morgan branded the move overdue, but said the proof would be whether it has managed to settle Chinese markets.

Shares, private pension funds and oil prices took a battering on Monday amid concerns over the slowing Chinese economy, with Bloomberg estimating that $2.7 trillion was wiped from global equities.

The volatility centres on fears that the world's second biggest economy is slowing, with investors concerned the slowdown may be worse that thought.

The early market recovery in the US was buoyed by positive economic news out of both the US and Germany.

In the former, new homes sales increased in August and consumer confidence showed a sharp rebound, pointing to an underlying strength that some commentators suggested could just yet nudge the US Federal Reserve into increasing interest rates next month, despite the global volatility. But that was before the market gains fizzled out last night.

German business confidence unexpectedly increased last month as companies brushed off concerns that China's slowing economy will drag on global growth.

US stocks staged a dramatic recovery on Monday after the Dow Jones briefly plummeted around a 1,000 points on opening amid further turmoil in global financial markets sparked by investor worries over China, but still closed down.

In a day dubbed Black Monday by China's media mouthpiece, European stocks plunged the most since 2008, oil hit a six-and-a-half year low and other commodities fell.

Dermot O'Leary of Goodbody Stockbrokers said Monday's volatility was a rare event.

"While China-related concerns will continue to feature, the relatively light trading volumes are likely to be having some impact on the scale of the market moves," Mr O'Leary said.

"Policy moves, both in developed and developing markets, may determine the direction of markets from here."

Oil rose yesterday as oversold conditions brought some buyers back to the market, but a lingering supply glut and worries about the slowing economy in China kept crude prices near six-and-a-half year lows.

Futures of US crude and Brent, the global oil benchmark, were both down more than 16 pc on the month.

US stocks dramatically reversed gains last night and closed with deep losses even after China cut interest rates in a bid to calm market jitters.

European stocks surged and closed up in the afternoon, partially recovering losses endured on 'Black Monday', and US stocks looked to be following suit.

But major indices turned negative in the final minutes of trading.

The Dow Jones fell 1.29pc and the S&P 500 lost 1.35pc amid fragile investor confidence.

Earlier, European shares enjoyed their biggest rebound in four years, clawing back some losses.

The ISEQ Overall Index closed up 4pc, its biggest one-day jump in more than five years.

The rebound was just as broad-based as Monday's slump, with almost all Stoxx 600 companies rising,

After the close of markets in Asia yesterday, and with Chinese stocks slumping again, Beijing opted to cut its main interest rate by 0.25 percentage points - its fifth rate cut since November - in a bid to eases international concerns.

US banking giant JP Morgan branded the move overdue, but said the proof would be whether it has managed to settle Chinese markets.

Shares, private pension funds and oil prices took a battering on Monday amid concerns over the slowing Chinese economy, with Bloomberg estimating that $2.7 trillion was wiped from global equities.

The volatility centres on fears that the world's second biggest economy is slowing, with investors concerned the slowdown may be worse that thought.

The early market recovery in the US was buoyed by positive economic news out of both the US and Germany.

In the former, new homes sales increased in August and consumer confidence showed a sharp rebound, pointing to an underlying strength that some commentators suggested could just yet nudge the US Federal Reserve into increasing interest rates next month, despite the global volatility. But that was before the market gains fizzled out last night.

German business confidence unexpectedly increased last month as companies brushed off concerns that China's slowing economy will drag on global growth.

US stocks staged a dramatic recovery on Monday after the Dow Jones briefly plummeted around a 1,000 points on opening amid further turmoil in global financial markets sparked by investor worries over China, but still closed down.

In a day dubbed Black Monday by China's media mouthpiece, European stocks plunged the most since 2008, oil hit a six-and-a-half year low and other commodities fell.

Dermot O'Leary of Goodbody Stockbrokers said Monday's volatility was a rare event.

"While China-related concerns will continue to feature, the relatively light trading volumes are likely to be having some impact on the scale of the market moves," Mr O'Leary said.

"Policy moves, both in developed and developing markets, may determine the direction of markets from here."

Oil rose yesterday as oversold conditions brought some buyers back to the market, but a lingering supply glut and worries about the slowing economy in China kept crude prices near six-and-a-half year lows.

Futures of US crude and Brent, the global oil benchmark, were both down more than 16 pc on the month.

Irish Independent

Read More

Promoted articles

Editors Choice

Also in Business