Asian stocks bounced back from earlier losses today (September 9th) led by a strong rally on global markets. Japan's Nikkei 225 index surged almost eight per cent – its biggest one-day jump since late 2008. Major US indexes rallied more than two per cent each overnight and European equity markets finished more than one per cent higher.
The rally started as investors hoped that China’s central bank would take more measures to stabilise the country’s stock market and economy after the release of weak economic data from China.
While the country's exports fell less than expected, imports slid beyond forecasts. In August, they fell 14.3 per cent in yuan-denominated terms from a year ago, while exports fell by 6.1 per cent. China's monthly trade surplus expanded by around 40 per cent compared with July to 368 billion yuan (£37.7 billion). A survey also showed Chinese manufacturing contracted at the fastest pace since 2009.
Tax reforms and infrastructure spending boost
This led the Chinese government to say today that it would strengthen fiscal policy, boost infrastructure spending and speed up reform of its tax system to support the economy.
"People were estimating that the market in China was going to crash," said Jeffrey Yu, head of single-stock derivatives trading at UBS told the Wall Street Journal. "That didn’t materialise. That was a huge relief."
Chinese Premier Li Keqiang said the prospects for China's economy were positive even though it continued to experience downward pressure. "We won't be swayed by short term economic fluctuations in our big picture direction," he said, adding that the creation of over seven million new urban jobs and keeping unemployment rate at 5.1 per cent in the first half of this year showed China's economy was on "reasonable track".
Trading sentiment was also boosted by comments made by Japanese prime minister Shinzo Abe suggesting company tax cuts were on the way.
Japan's Nikkei 225 index jumped 7.7 per cent to 18,770.51, South Korea's Kospi gained three per cent to 1,934.20 and Hong Kong's Hang Seng was up 4.5 per cent to 21,211.17. The Shanghai Composite index closed up 2.3 per cent to 3243.92.
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