Stocks End Wild Week Mostly Flat

29 Aug 2015 | Author: | No comments yet »

Asian Stocks Rise After US Data Calms Investor Nerves.

The rebound in China’s stocks will be short-lived because state intervention is too costly to continue and valuations aren’t justified given the slowing economy, says Bank of America Corp. “As soon as people sense the government is withdrawing from direct intervention, there will be lots of investors starting to dump stocks again,” said David Cui, China equity strategist at Bank of America in Singapore.

HONG KONG — Asian stocks rose Friday as upbeat U.S. economic data lifted investors’ spirits following days of stomach-churning turbulence sparked by a heavy sell-off in China. The market then rebounded sharply over the next two days as investors decided the sell-off was overdone. “People are taking a little bit of a pause,” said Paul Springmeyer, senior portfolio manager at the Private Client Reserve at U.S. Regional markets took their lead from Wall Street, where benchmarks had a strong finish after a government report showed the U.S. second quarter economic growth was much stronger than initially estimated. Bank. “We’re finally winding down here where maybe we’re seeing more rational behavior.” Despite recovering their losses from earlier in the week, stocks are still on course for their worst monthly performance in more than three years. The Shanghai gauge rallied for a second day on Friday amid speculation authorities were supporting equities before a World War II victory parade next week that will showcase China’s military might.

Japan’s benchmark Nikkei 225 index led regional gains, adding 2.5 percent to 19,020.35 after lackluster monthly data on inflation and household spending raised hopes of further stimulus. China Securities Finance Corp., the state agency tasked with supporting share prices, will probably end direct market purchases within the next month or two, Cui said. The Shanghai Composite Index in mainland China rose 1.2 percent to 3,120.25, adding to its 5.3 percent gain Thursday, which was its first increase in six days, during which it shed nearly 23 percent. While the benchmark gauge trades 47 percent above the levels of a year earlier, data from industrial output to exports and retail sales depict a deepening slowdown. Australia’s S&P/ASX 200 edged up 0.2 percent to 5,243.40. “After another strong market open, investors are starting to wonder what the recent sell-off was all about,” Ric Spooner, chief analyst at CMC Markets in Sydney, Australia, wrote in a commentary. “Another day of strong buying looks likely as investors scramble to take advantage of what looks like a value opportunity before it closes down.” On Wall Street, the Dow Jones industrial average climbed 2.3 percent to 16,654.77, recouping nearly half of its losses over the past two days following a sharp six-day slump.

The recent market turmoil has thrown into doubt expectations for a rate increase next month, with most economists now saying it’s off the table for now. Federal Reserve Vice Chairman Stanley Fischer said Friday that before the recent turbulence in financial markets, there was a “pretty strong case” for starting to hike rates in September.

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