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Chinese Market Surge Leads Global Stocks Higher

Worries about China's economic outlook rose after July exports shrank by an unexpectedly wide margin and August manufacturing weakened.

Mnet 48040 China Markets

China's main stock index surged 5.3 percent Thursday, its biggest gain in eight weeks, leading world markets higher and giving investors some relief after gut-wrenching losses.

The Shanghai Composite Index posted its first gain in six days to close at 3,083.59 points, bouncing back from losses that triggered worldwide selling and wiped nearly 23 percent off its value over the past week.

Wall Street was expected to rise on the open as European markets rose and Asian indexes closed higher.

Hong Kong's Hang Seng advanced 2.9 percent to 21,697.31 and Tokyo's Nikkei 225 added 1.1 percent to 18,574.44. France's CAC-40 increased 2.8 percent to 4,627.74 and Germany's DAX gained 3 percent to 10,294.45.

The gains came after Wall Street rocketed up Wednesday, when the Dow Jones industrial average soared more than 600 points, or 4 percent. That was its third-biggest point gain of all time and its largest since Oct. 28, 2008.

Ahead of the open, Dow futures were up 1 percent and S&P 500 futures 0.9 percent higher.

Traders were encouraged by comments from William Dudley, president of the New York Federal Reserve Bank, that the case for a U.S. interest rate hike in September is "less compelling" given China's troubles, falling oil prices and emerging markets weakness.

As Fed officials prepare for their annual meeting in Jackson Hole, Wyoming, "people are looking for insight on what's really going to happen on interest rates," said trader Andrew Sullivan at Haitong Securities in Hong Kong.

Following a six-year run-up in U.S. stocks that has pushed major indexes to all-time highs, investors worry the economy could falter if the Fed raises rates too soon.

The rebound also is driven by bargain-hunting after prices were beaten down over the past few days, said Sullivan.

"You've seen everything just bounce back today," he said. "The real question is now whether you get the fundamental players coming back in."

It might be too early to expect a long-term Chinese rebound, cautioned Huang Cengdong of Sinolink Securities in Shanghai. Worries about China's economic outlook have risen after July exports shrank by an unexpectedly wide margin and August manufacturing weakened.

"Considering the weakening economic outlook, the rally gains won't last long," said Huang.

In currency markets, the dollar rose to 120.18 yen from Wednesday's 120.14 yen. The euro edged down to $1.1308 from the previous session's $1.1337.

Benchmark U.S. crude gained $1.28 to $39.88 in electronic trading on the New York Mercantile Exchange. The contract fell 71 cents on Wednesday to close at $38.60.

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