China stock market ended the week almost 8% lower after volatile trading that started on August 24 with shock losses and spread fear to global markets.
On August 28, the mainland’s benchmark Shanghai Composite closed up 4.8% at 3,232 points.
China’s second bourse, the Shenzhen Composite, closed up 5.4% to 1,846 points, but ended the week 9.4% lower.
Other Asian stock markets also continued their rebound, helped by a strong finish for Wall Street.
Photo AFP
Japan’s benchmark Nikkei 225 closed up 3% at 19,136 points, but the Hang Seng index in Hong Kong reversed earlier gains to close down 1%.
The Hang Seng ended the week 3.6% lower – its sixth consecutive weekly fall.
In London, the FTSE 100 also turned negative, after initially rising, to be down slightly at 6,186 points.
In Sydney, the ASX 200 finished 0.6% higher at 5,263 points.
Marking the end of a week of corporate results, the supermarket Woolworths reported a 12.5% drop in full-year profit – its first fall in almost two decades.
However, Woolworths’ shares closed 1.5% higher after the retailer announced a new chief executive in a bid to revive its fortunes.
South Korea’s Kospi index finished 1.6% higher at 1,937 points.
The recovery across Asia took its cue partly from China’s recovery, but also the strong sentiment from the US.
Shares on Wall Street rose overnight and oil prices jumped sharply after revised figures showed the US economy expanded far more than originally thought in the three months to June.
China stock market returns to positive territory after massive losses there earlier in the week rocked markets around the globe.
The Shanghai Composite was up by 0.6% to 2,942.94 points.
The turnaround though does little to make up double-digit percentage losses made so far this week.
Shares elsewhere in Asia also made gains in early trade on the back of a jump on Wall Street on August 26, which saw its biggest rise in 4 years.
In other Asian markets on August 27, Hong Kong’s Hang Seng index was up by 2.5% at 21,613.48 points; the region’s biggest stock market, Japan’s Nikkei 225, finished trading 1.1% up at 18,574.44, building on strong gains made the previous session; South Korea’s Kospi also notched up gains for a second day. The index closed 0.7% higher at 1,908.0 points.
In Australia, the benchmark S&P/ASX 200 wrapped up the day 1.2% higher at 5,238.70 points.
Severe losses on the Chinese market over the past week had sent shockwaves around the globe.
A move by the country’s central bank, the People’s Bank of China, to cut its key lending rate on August 25 initially failed to calm the Chinese market.
Concerns about China’s slowing economic growth have been rising for months with a constant trickle of poor economic data, the latest of which last Friday suggested that factory activity shrank in August at its fastest pace in more than 6 years.
Analysts believe the tentative share market rebound indicates fears over China’s woes may have somewhat eased.
China’s stocks have closed lower despite a fresh interest rate cut by the country’s central bank.
Shanghai Composite fell 1.27% to 2,927.29, after veering in and out of negative territory.
It had fallen about 16% this week, rocking global markets.
On August 25, China’s central bank cut its key lending rate by 0.25 percentage points to 4.6% in a bid to calm stock markets after the past days’ turmoil.
The dramatic losses and volatility in China have shattered investor confidence and led to sharp falls in Asia and the US over the past days.
European markets were down by about 1% in morning trading on August 26, after rallying on the previous day.
The interest rate cut was the fifth by the People’s Bank of China since November 2014.
A rate cut will make it cheaper for banks to borrow from the central bank and will in turn make it easier for businesses and private people to borrow money from those banks.
Given China’s central role in world trade, a slowdown in the world’s second-largest economy would be likely to reverberate around the globe.
Japan’s Nikkei gains come after a painful week for the Tokyo index, which had shed more than 8% in the past two sessions.
South Korea’s Kospi index was also in positive territory, closing 2.6% higher at 1,894.29 points, while in Australia, the S&P/ASX 200 finished 0.7% up at 5,172.80.
Overnight, European and US markets saw another session of volatile trading. Wall Street’s Dow Jones closed 1.3% down, marking the sixth consecutive day of falls for US stocks.
London’s FTSE 100 index closed up 3% as major markets in France and Germany both gained more than 4%.
In an effort to calm stock markets after two days of turmoil, China’s central bank has cut its main interest rate by 0.25 percentage points to 4.6% to boost growth in the country’s economy.
It is the fifth interest rate cut since November and will take effect on August 26.
The People’s Bank of China’s move has boosted global share prices further, with Wall Street’s Dow Jones index opening more than 1.7% higher after the move.
In mid-afternoon European trading, London’s FTSE 100 was up almost 3%, while Germany’s Dax and the Paris Cac were ahead nearly 5%.
Other European markets, including Lisbon, Madrid, Moscow and Milan, were all sharply higher.
The People’s Bank said that the interest rate cut was to reduce “the social cost of financing to promote and support the sustainable and healthy developments of the real economy”.
The Chinese central bank also acted to increase the flow of money in the economy by cutting the amount of cash banks must keep in reserve, effectively freeing them to lend more cash.
Its move was broadly welcomed by economists.
A research note from JP Morgan stated: “China’s decision to cut… will be regarded by many investors as overdue. The litmus test will come overnight, however, and the efficacy of the… cut in boosting the domestic stock market.”
The Chinese authorities have taken a number of steps to help stem stock market losses since the market began a series of heavy falls in June.
Earlier, China’s falling stock market had hit markets around the globe on August 24, and – although Asian markets were again hit overnight – European stocks had already opened in a more optimistic mood on August 25.
The main Shanghai Composite index closed Tuesday’s session down 7.6% at 2,964.97 points. Japan also saw more sharp falls, sending Tokyo’s Nikkei index down 4%.
The global sell-off has been driven by fears that China’s slowing growth means less business for everyone else.
China’s booming economy of the last 30 years has seen the country suck in supplies of raw materials for manufacturing and, increasingly, manufactured and luxury goods from other countries.
China stock market has plunged for a second day after worries over the country’s slowing growth triggered a global sell-off.
The Shanghai Composite, China’s main stock exchange, fell 7.6% on August 25 – after losing 8.5% on what state media have called China’s “Black Monday” on August 24.
It was the worst fall since 2007 and caused sharp drops in markets in the US and Europe.
Tokyo’s Nikkei index had a volatile day, closing 4% lower.
The Shanghai index ended the day 245 points lower at 2,964.97.
After decades of rapid growth, China is slowing down, and investors globally are worried that firms and countries which rely on high demand from China – the world’s second largest economy and the second largest importer of both goods and commercial services – will be affected.
Chinese shares had experienced a year-long rally – mainly fuelled by investors borrowing money to buy shares – which came to an end in June.
The government then intervened in financial markets, to try to maintain momentum in the economy.
Two weeks ago China’s central bank devalued the currency, the yuan – this raised fresh concerns that China’s economy could be in worse shape than previously thought.
A cheaper currency lowers the price of China’s exports, making them more attractive to global companies.
Elsewhere in Asia and Australia on August 25, markets beat expectations, opening lower but then returning back to positive territory: Korea’s KOSPI gained almost 1% and Australia’s S&P ASX/200 ended the day 2.7% higher.
The dollar remained weak at 119.15 yen, up from a seven month low of 118.51 yen in New York on August 24.
Commodity prices also recovered after Monday’s falls, although oil remains under pressure because of a global oversupply.
Overnight, the Europe and the US saw dramatic falls, but are expected to show some signs of recovery when they open on August 25.
Wall Street’s Dow Jones fell 6%, but then almost recovered its losses before closing 3.6% lower.
London’s FTSE 100 index closed down 4.6% as major markets in France and Germany were down by 5.5% and 4.96% respectively.
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