An investor stands in front of an electronic board showing stock information at a brokerage house in Shanghai on Sept. 2.CHINA DAILY/Reuters
North American stocks rebounded as trading opened on Wednesday amid a respite in a global equities selloff.
The Standard & Poor's/TSX Composite Index rose 75.10 points, or 0.56 per cent, to 13,557.00 in Toronto. The S&P 500 Index rose 1.2 per cent to 1,936.82 at 9:38 a.m. in New York, after falling 3.8 per cent over the previous two sessions. The Dow was up 210 points, or 1.3 per cent, to 16,268.40, while the Nasdaq was up 60.07 points, or 1.3 per cent, to 4,696.18.
Stocks tumbled worldwide the previous two days amid revived concern that a slowdown in China will hamper growth around the globe. Equities in Shanghai erased most of a 4.7-per-cent drop Wednesday, as state funds intervened to stabilize the market. With China stepping into the background for a two-day holiday, attention is turning to Friday's U.S. payrolls report as investors gauge the strength of the world's largest economy and the timing of the Federal Reserve's next policy move.
"China's going to be closed the next few days and that means there won't be this negative lead-in to markets in the morning so that will be a nice reprieve," Stephen Carl, principal and head equity trader at Williams Capital Group LP, said by phone. "The date for a potential rate raise is certainly going back and forth and with the recent volatility in the market and situation overseas, people don't have much conviction on when it will be."
Friday's jobs report from the world's largest economy will provide the last major data point before Fed policy makers meet on Sept. 16-17. The ADP Research Institute said on Wednesday the U.S. added more jobs in August, though the total was less than forecast.
Concern that China will curb global growth heightened Tuesday after data pointed to weakness in Europe and the slowest factory expansion in the U.S. in two years. Australia's economy expanded at half the pace forecast by analysts, a report showed on Wednesday.
""Volatility will stay high for a while .China is still making people panic," said Teis Knuthsen, chief investment officer at Saxo Bank A/S's private-banking unit in Hellerup, Denmark. "But many companies are starting to look very cheap now and the market will eventually find a support level, especially if the Fed doesn't raise rates this month."
On Tuesday, the S&P/TSX slumped 2.7 per cent as data showed Canada's gross domestic product shrank again in the second quarter, meeting the technical definition of a recession. The report followed disappointing China manufacturing data that weighed on global stocks.
The S&P 500's 3-per-cent decline on Tuesday - its third- biggest of 2015 - marked a sour start to what has historically been the worst month of the year. The equity gauge falls 1.1 per cent on average in September, according to data compiled by Bloomberg going back to 1927. Another troubling sign is that futures on Chicago Board Options Exchange Volatility Index have climbed, showing traders predict turbulent markets will endure.
The S&P 500 slumped 6.3 per cent in August as China's currency devaluation spurred concern over global growth, erasing more than $5.7-trillion in equity market values worldwide, while volatility surged the most on record. The equity index entered a correction last week, only to then rally more than 6 per cent over two days. It closed Tuesday 10 per cent below its all-time high set in May.
"It's difficult to find an end to the volatility," Tom Rivers, a Hong Kong-based fund manager at UBS Group AG's global asset management unit, told Bloomberg TV. "That being said, we could well find a bottom to markets in the next week or two. From a longer-term perspective, undoubtedly equity markets will be higher in the next 9-12 months."