China falls again but other Asian stocks, Europe higher
BEIJING: Chinese stocks fell again Thursday while other major global markets rose after the US Federal Reserve left interest rates unchanged at a record low.
KEEPING SCORE: In early trading, Germany's DAX gained 0.2 percent to 11,229.04 points and France's CAC-40 was up 0.2 percent at 5,029.86. Britain's FTSE 100 gained 0.4 percent to 6,655.83. On Wall Street, futures for the Dow Jones industrial average and Standard & Poor's 500 both were off 0.1 percent. On Wednesday, the Dow and the S&P both rose 0.7 percent and the Nasdaq composite gained 0.4 percent.
CHINA'S GYRATIONS: The Shanghai benchmark suffered its biggest one-day drop in eight years on Monday when it plunged 8.5 percent despite government intervention to stem a slide in stock prices. The index fell further before rebounding 3.5 percent on Wednesday and then slipping again Thursday. Analysts say the volatility is a sign economic fundamentals cannot support stock prices at their current level. Other say even if the intervention restores confidence, markets are likely to face turbulence in coming weeks before prices settle down.
ASIA'S DAY: The Shanghai Composite Index fell 2.2 percent to 3,705.77 for its third losing day this week. Hong Kong's Hang Seng lost 0.5 percent to 24,497.98. Tokyo's Nikkei 225 advanced 1.1 percent to 20,525.80 and Australia's S&P/ASX 200 rose 0.8 percent to 5,669.50. Seoul's Kospi shed 0.9 percent to 2,019.03. Benchmarks in India, Taiwan and the Philippines rose.
FED DECISION: Fed policymakers voted Wednesday to leave interest rates unchanged and gave no indication a rise was imminent. The Fed said the U.S. economy is improving but signaled that it wants to see further economic gains and higher inflation before raising rates. Many investors expect the Fed will still lift rates in September or December, but its statement gave no timing for the raise. Low interest rates have been good for stock investors, helping fuel a bull market that has lasted more than six years.
THE QUOTE: "You have to hand it to the Federal Reserve. They look primed to put up the fed funds rate in September, perhaps December. Yet at the same time, equities looks supported and the yield curve remains unchanged," said IG chief strategist Chris Weston in a market commentary. "If the object of its communication exercise is to ease the market into a normalization process without causing a stir in capital markets, then you would give their performance a nine out of ten."
US EARNINGS: Stocks were boosted by a strong batch of corporate earnings. Gilead Sciences rose 2.3 percent after its profit jumped 23 percent, helped by its new hepatitis C medicine Harvoni. Northrop Grumman led defense companies higher after it posted a stronger-than-expected profit in the second quarter and raised its outlook for the year. Northrop's stock jumped 6.2 percent, its biggest one-day gain in at least five years.
ENERGY: Benchmark US crude fell 2 cents to $48.81 per barrel in electronic trading on the New York Mercantile Exchange. The contract jumped 81 cents to close at $48.79 on Wednesday. Brent crude, used to price international oils, gained 32 cents to $53.70 in London after rising 8 cents to $53.38 the previous session.
CURRENCIES: The dollar rose to 124.17 yen from Wednesday's 123.90 yen. The euro edged down to $1.0980 from the previous session's $1.0986.