LONDON: Global stock markets rose Thursday on renewed confidence in the US recovery after days of wild swings, but dealers warned that the spectre of the slowing Chinese economy threatens more turbulence ahead.

Equities in Europe and on Wall Street climbed on revised US data showing stronger US growth in the second quarter of 3.7 per cent, compared with the previous estimate of 2.3pc. “The US economy continues to perform on a consistent basis .... (showing) that its economic recovery is sustainable... The US is leading the global economy as it has been since late last year,” said FXTM chief market analyst Jameel Ahmad.

The news gave comfort to investors rattled by lagging Chinese growth, and sent US indices at or near 1.7pc higher in mid-day trade in New York, after snapping a six-day losing streak on Wednesday by closing about 4pc ahead. Europe’s main markets rebounded Thursday, erasing losses earlier in the week, with Frankfurt’s DAX 30 index finishing up 3.18pc and the CAC 40 in Paris gaining 3.49pc. London’s benchmark FTSE 100 index soared 3.56pc at the close.

Asian equities also rallied Thursday after several tumultuous days, but dealers cautioned that enduring concerns about China would spell more uncertainty.

Shanghai soared 5.34 per cent to end the worst five-day rout for almost two decades, cheered partly by this week’s interest rate cut from the People’s Bank of China (PBoC) aimed at boosting the world’s second-largest economy, which represents some 13pc of global GDP.

In addition, after a strong rise in the last hour of Shanghai trade, brokers said there was speculation over state buying or a possible top-level meeting of the State Council, or cabinet, which could detail more measures to support the market.

“There were external funds flowing in, but it’s uncertain if it was the national team,” Shenwan Hongyuan analyst Gui Haoming said, referring to entities which trade on behalf of the government.

Qian Qimin, also of Shenwan Hongyuan, added that investors expect that “pension funds will enter the market.” China said Sunday that its huge state pension fund will be allowed to invest up to 30pc of assets — which totalled 3.5 trillion yuan at the end of 2014 — in stocks.

Elsewhere in Asia, Hong Kong shares hurtled 3.60pc higher, Tokyo gained 1.08pc and Sydney added 1.17pc.

“For now there is quite a bit of relief that stocks in China are finally staging a moderate and long-awaited bounce back,” said analyst Markus Huber at brokerage Peregrine & Black.

World markets had suffered a torrid start to the week on “Black Monday”, when Shanghai collapsed by almost 8.5pc, sparking fears that China’s slowdown could herald a global recession.

Published in Dawn, August 28th, 2015

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