Bullish U.S. futures point to strong Wall Street opening Wednesday with the Dow Jones set to surge more than 300 points despite a continued poor performance in China and fears over a global growth slowdown.
Investors are growing in confidence in the wake of the People’s Bank of China’s reduction in interest rates of 0.25 percentage points and the government’s announcement of a $22 billion into the interbank money markets. The dollar has strengthened against the euro climbing 0.5 percent.
The rally follows a roller coaster ride on Wall Street on Tuesday after stocks opened strongly but suffered a massive sell-off in the final hours of trading leaving the market 600 points down from its highest point.
However, China’s market continued to sustain losses. The Shanghai Composite Index was down 1.3 percent by the close of trading on Wednesday taking total losses to a little over 16 percent this week after leaving markets in turmoil. Chinese investors were underwhelmed by the central bank’s interest cut of 0.25 percentage points. (RELATED: China’s ‘Black Monday’ At Center Stage As Global Stocks Tank)
The fears over the integrity of the Chinese economy and future growth still abound among investors. Michael Bolliger, head of emerging market asset allocation at UBS Wealth Management, told Reuters “the root of this is concern that growth in China may be a lot lower than what the market had thought.
“They made further announcements yesterday but the market does not appear fully convinced, it has not distracted people from the fears about the economy.”
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