Chinese and European shares have rebounded while U.S. stocks were lower as the trend seen in previous days was reversed. Chinese stocks recovered about 6% early on Thursday as China does its best to stop the massive sell-off. Chinese stocks have lost around 30% since mid-June, causing massive concern as China employs a number of measures to try and stop the declines. In its most drastic effort yet, Chinese authorities have banned shareholders from trading if they possess large stakes in listed firms. As the trading day came to a close, the CSI 300 index of the largest listed companies in Shanghai and Shenzhen has added an impressive 6.4% while the Shanghai Composite Index added 5.8% - its largest daily percentage gain in more than six years. China’s stock market remained partially closed with roughly 1,500 listed companies suspended from trading. Therefore, most analysts believe that while the gains were indeed a positive sign, the crisis in Chinese stocks is far from over.
Greek has instilled some optimism in investors as it formally applied for an accelerated review of a three-year loan plan yesterday. Greek Prime Minister Alexis Tsipras called on European officials to support a fair deal while acknowledging Greece’s part in the crisis. EU officials have given Tsipras five days to come up with a convincing cash-for-reforms plan. European stocks rebounded on Wednesday as financial and pharmaceutical shares rose and politicians gave Greece some more time before they would be forced out of the euro. The German DAX 30 added 0.7% to close at 10747.3, the French CAC 40 gained 0.8% to trade at 4639.02 and Spain’s IBEX 35 added 0.8% as well to trade at 10430.30. So far today stocks have continued show similar gains.
In the meantime, U.S. stocks were lower due to concerns over China and the disruption of trading after a computer failure. The Dow Jones Industrial Average fell to 261.49 points (1.5%) to trade at 17414.42 – its lowest level since early February. The S&P 500 Index fell 34.66 points (1.7%) to trade at 2046.68 and the Nasdaq Composite fell 87.7 points (1.8%) to trade at 4909.76.
The UK’s interest rate decision is due today, although no major changes are expected. Later in the day more U.S. employment data will be released, followed by European industrial production data on Friday.