* Shanghai stock market closes down 1.3% * FTSE 100 falling again * Martin Sorrell: Still a raging China bull * Chinese police make arrests * China crisis interactive: from peak to Black Monday 9.23am BST This Bloomberg chart show how the Chinese stock market ran out of juice today, after attempting an afternoon rally: 9.12am BST China has muscled the Greek debt crisis out of the way, to become the biggest issue causing investors sleepless nights: You could say investors are concerned about China... pic.twitter.com/NuH7LAwBvB 9.09am BST THE BOSS OF LUGGAGE MAKER SAMSONITE HAS WARNED THAT SALES GROWTH TO CHINESE CUSTOMERS WILL HALVE THIS YEAR, IN A SIGN THAT THE ECONOMY IS WEAKENING. China sales are expected to grow 15 to 16% on a local currency basis in the second half of the year and beyond,compared with nearly 30% growth in the first half, Chief executive Ramesh Tainwala said. “China is an important part of our business but not the only part of our business,” Tainwala said, speaking to reporters after the company reported interim results 8.54am BST My colleague Mark Sweney has more details of Martin Sorrell’s views on China: Related: WPP's Sir Martin Sorrell bullish about China prospects despite sales slowdown 8.45am BST ONE OF BRITAIN’S TOP BUSINESS CHIEFS, SIR MARTIN SORRELL, IS STILL “A RAGING BULL” ABOUT THE CHINESE ECONOMY. Be careful what you wish for...China has been the biggest driver of the world economy. It’s been trench warfare, hand to hand combat, it’s not been easy. Interesting interview on @BBCRadio4 today with Martin Sorrell: PBOC have stopped fighting the markets and taken more laid back approach. 8.32am BST After that late selloff in China, Europe’s stock markets have now all shed at least 1.7%. Nervy start to the European open as the #FTSE drops below 6000. TM pic.twitter.com/fXa7kT6tQm Looks like yesterday's positive European session may have been the eye of the storm It’s Wall Street’s slump ahead of last night’s close that appears to be setting the pace for the UK market and as is often the way after these excessive moves, this volatility appears likely to be with us for some time yet. 8.17am BST CHINA’S STOCK MARKET HAS FALLEN AGAIN, FOR THE FIFTH DAY RUNNING, AS THE MARKET ROUT CONTINUES *SHANGHAI COMPOSITE CLOSES 1.3% LOWER AS PBOC FAILS TO END ROUT 8.08am BST EUROPEAN SHARES ARE LOSING GROUND AT THE START OF THE TRADING DAY, WITH FEARS OVER CHINA STILL GRIPPING THE CITY. Britain’s FTSE 100 has quickly shed 90 points, a drop of 1.5%, taking it back below the 6000 point mark to 5991 and wiping out half of Tuesday’s recovery. 8.00am BST Hold onto your (tin) hats. Europe’s stock markets are opening.... 7.58am BST MARKETS HAVE BEEN PARTICULARLY VOLATILE THIS WEEK BECAUSE MANY INVESTORS ARE STILL ON HOLIDAY, MEANING LESS LIQUIDITY THAN USUAL. David Buik, a City veteran who has lived through more market crashes than anyone else I know, says “normal working service” will resume next week. The move by the Chinese authorities attracted considerable adverse criticism not only from the market but also from political heavyweights such as the Japanese Finance Minister, Aso-San, who was not backward in coming forward in implying that last week’s devaluation of the Yuan was ‘ham-fisted’ and unprofessional. Market observers were also expressing real concern about the robustness of China’s banking sector and the potential threat of a major credit crisis. This issue is more acute than China’s growth contraction. 7.34am BST Don’t knock that Scottie Dog technical analysis. As feared, China’s stock market is shedding its gains in late trading. And that means Europe’s selloff may be more dramatic: FTSE100 now expected to start -70 at 6011. 7.28am BST Speaking of unexpected tumbles..... Sinkhole opens near NE China bus stop, 4 people fall in #XinhuaTV pic.twitter.com/X77aAl2ixz 7.23am BST WE’RE INTO THE CRUCIAL LAST HOUR OF TRADING IN CHINA. TYPICALLY, WE’VE SEEN SHARP MOVES AT THE END OF THE DAY. WILL TODAY BE DIFFERENT, OR CAN SHANGHAI HOLD ONTO TODAY’S GAINS? This ‘technical analysis’ from FastFT’s Patrick McGee shows how the situation could deteriorate from here..... According to Scottie Dog pattern, Shanghai will see a peak around 2pm and a brisk decline into the close. @frostyhk pic.twitter.com/BPsOd9t8VZ 7.19am BST Japan’s stock market has closed for the day, with the Nikkei rallying by over 3%. That claws back some, but not all, of Tuesday’s losses. Here’s the situation across Asia a moment ago: 7.14am BST Hello all. It’s a grey day in London. Dark clouds everywhere, and rain on the way. Our European opening calls: $FTSE 6057 down 25 $DAX 10028 down 100 $CAC 4531 down 34 $IBEX 10026 down 89 $MIB 21303 down 346 While European markets basked in the afterglow of yesterday’s Chinese rate cuts, amidst optimism that we may have seen a base earlier this week, US markets inability to hold onto their gains and sink like a soggy blancmange are likely to see a negative open for Europe this morning, though a rebound in Asia has cushioned some of the effects. 6.51am BST I’m now handing over the wheel of this live blog to my colleague in London, GRAEME WEARDEN, who will take you through the rest of the day’s markets ups and downs. Thanks for reading and for the comments. 6.42am BST Why has the Shanghai Composite returned from its lunch break in more buoyant mood? GEORGE CHEN, managing editor of the South China Morning Post international edition, has some thoughts: Gov funds are said to be buying large financial stocks, esp state-owned banks, to support index, clear signs of gov intevension - once again Post-midday V-shape rebounding comes at "good news" incl police arrest of top bankers, financial journalist, following central bank rate cut 6.38am BST US president BARACK OBAMA held a telephone conversation with Japanese prime minister SHINZO ABE on Wednesday morning, which touched upon economic issues. Abe’s spokesman YOSHIHIDE SUGA said the two leaders agreed to work together on global economic issues in the wake of the stock market meltdown sparked by fears over China. 6.30am BST Shanghai is back from lunch and is having something of a rebound, up around 4%: 6.23am BST CHRIS WESTON, chief market strategist for IG, says the day’s action so far has allowed traders “to catch a much-needed breath”: It still feels as though volatility can break out at any time and a quick 1-2% move in US futures, Nikkei, ASX 200 or Hang Seng could materialise at any time. Of course, these sort of moves will happen when the US volatility index (VIX) is at 36% (over double the year average) and the ASX VIX is at 28% (year average 16%). Things can get dicey quickly … At the time of writing, stronger buying is being seen in the Chinese equity markets, but price action is fairly whippy. The market has seen through yesterday’s 25 basis point cut in benchmark lending rate and the 50 basis point cut to the reserve ratio requirement (RRR). One questions why they didn’t ease over the weekend. The extra liquidity injected into the banking system would be somewhere between RMB650 billion and RMB700 billion, which sits nicely with the recent use of shorter-term liquidity tools. Most understand this easing for what it is: a policy move aimed at counteracting the tightening of financial conditions caused by sizeable capital outflows. This is not going to boost growth … 6.15am BST You can read our latest report on today’s market developments here: Related: Stock markets continue to be volatile as investors fear China risk 6.07am BST FERGUS RYAN sends news from China of police action related to trading – and to the reporting of it: Following the arrest of a couple of China Securities Regulatory Commission (CSRC) officials – one current and one former – for insider trading and faking documents, Chinese state media is now reporting that a journalist who was covering the agency is being investigated. Caijing magazine has confirmed that its reporter WANG XIAOLU was summoned by police yesterday in connection with accusations of faking stock news. 5.55am BST Markets across Asia were holding their breath on Wednesday after early hopes that the worst of this week’s turmoil could be behind them were tempered by concern that China has not done enough to stabilise its economy. A day after China’s central bank lowered interest rates in an attempt to ease the crisis, most Asia-Pacific stocks suffered minor losses, while Japan’s Nikkei benchmark index mounted a modest comeback after six days of bruising losses. 5.44am BST A new session high for the Nikkei: up 2.26% to 18.207.37. The Chinese markers are still on their lunch break. 5.43am BST Agence France-Presse offers a different perspective on China’s struggles – the fate of Swiss luxury watch-makers: Swiss watchmakers are facing turbulent times in one of their top markets, as the already shrinking luxury sales in China are compounded by the recent devaluation of the yuan. The move rattled the Alpine country’s luxury watchmakers, who have already seen their once booming sales in China take a hit as Beijing began to crack down on corruption in the country by banning extravagant gifts like prestigious watches to public officials. 5.32am BST News comes in that Malaysian prime minister NAJIB RAZAK is to hold a press conference around now on the economy; I’ll keep an eye on what emerges from that. 5.28am BST A glance at some of the global front pages for Wednesday. The SOUTH CHINA MORNING POST leads on “stock turmoil” and the bank rate cuts: Wednesday's front pages of The South China Morning Post. To subscribe, find out more here: http://t.co/h56QweW28k pic.twitter.com/9Yz0f7kAeV Today's Global Times newspaper (August 26, 2015) http://t.co/kfvJpMeCvW , Mobile version http://t.co/KEdbsl78rs pic.twitter.com/EeqjVeYuGR Wednesday's International NY Times: Market crash makes nary a sound in state media #tomorrowspaperstoday #bbcpapers pic.twitter.com/QgQ5OLAh4r Wednesday's FT front page: Beijing cuts interest rates in bid to revive economy #tomorrowspaperstoday #bbcpapers pic.twitter.com/JTwepwAJnf 5.15am BST As China hit midday, following a rollercoaster morning, the CSI300 index was up 1.7% and the Shanghai Composite Index was up 0.8%. Still an afternoon to get through, of course … 4.28am BST A catch-up of this morning’s choppy activity, via Reuters: Asian stocks fell on Wednesday as investors feared fresh rate cuts in China would not be enough stabilise its cooling economy or halt a collapse in its stock markets. China’s key share indexes attempted to move higher several times in early trade only to be slapped back by waves of selling, reflecting investors’ views that much more support was needed from the government and the central bank. In a sign of how fearful investors have become of risky assets, US stock index futures resumed their descent in early Asian trade with the US S&P 500 mini futures down 0.4%, nearing Monday’s 10-month low of 1,831. Overnight, major US stock indexes shot up after China’s policy easing but later gave up all their gains, with the S&P 500 ending down 1.4%. 4.14am BST GLENN STEVENS, governor of the Reserve Bank of Australia, has been speaking at an economic reform summit in Sydney – also attended by treasurer JOE HOCKEY; see here – about the country’s economic growth issues, AAP reports. Stevens said that despite record low interest rates and business and consumer confidence staying around average, economic growth has not been able to get to 3%. It may be that potential growth is a bit lower than we used to think, though I don’t think we can know whether that is so at present. The fiscal policy debate, usually framed as ‘when will we get back to surplus?’ is actually about ‘how do we get more growth?’ The kind of growth we want won’t be delivered just by central bank adjustments to interest rates or short-term fiscal initiatives that bring forward demand from next year, only to have to give it back then. A key question worth asking is ‘how do we generate more growth?’ Not temporary, flash-in-the-pan growth, but sustainable growth. 4.01am BST Japan’s main Nikkei 225 stock index ended the morning up 0.5% at 17,896.23, while other Asian stocks fell then rose on what promises to be another unpredictable day of trading. Hong Kong’s Hang Seng index was up 0.2%, while China’s benchmark Shanghai Composite index source, the victim of a severe bruising earlier in the week, fell 0.4%. 3.51am BST Chinese markets have been choppy in early morning trade as investors reacted to a Tuesday evening rate cut from the People’s Bank of China, FERGUS RYAN reports. Seventy minutes into trading and shares on the Shanghai composite had fallen -3.32% to 2,866.45 after seesawing all morning. 3.43am BST And here’s that snapshot spelled out. Within the first 20 minutes of trading today, the Shanghai Composite: 3.34am BST This snapshot via Google Finance gives an indication of the volatility of the Shanghai Composite in its first hour this morning: 3.29am BST Meanwhile, FERGUS RYAN reports from Beijing, a new survey out today indicates the recent stock market volatility may not be affecting Chinese consumer sentiment. The Westpac MNI China Consumer Sentiment Indicator rose in August, the third straight month it has done so. The indicator rose 1.8% for the month – the highest it has been since May 2014. 3.20am BST China’s response on Tuesday to the previous day’s precipitous falls had a marked effect on markets yesterday and will no doubt continue to do so today. The key moves by the People’s Bank of China were: Beijing had the scope to do more to boost confidence after the turmoil of recent days, but has opted for a more measured approach at this stage. There are reasons for this. Capital has been leaving China at a rapid rate in recent weeks, and a big reduction in interest rates would have provided extra encouragement for investors to take their money elsewhere. 3.11am BST More on the yuan, set today at its weakest level for four years: China’s yuan weakened early on Wednesday after aggressive monetary easing by the central bank on Tuesday evening. The People’s Bank of China set the midpoint rate at 6.4043 per dollar prior to the market open, its weakest level since August 2011, and firmer than the previous day’s closing quote of 6.4124. 3.01am BST My colleague FERGUS RYAN sends this latest from an edgy morning in China: The central bank’s move to ease monetary policy buoyed stocks at the opening of trade on Wednesday, but experts are questioning whether the rally will be durable. The Shanghai Composite has swung wildly in morning trade but appears to be flirting with the 3000-point mark. 2.54am BST Taiwan stocks have fallen this morning. As of 1:40 GMT (that’s about 10 minutes ago), the main TAIEX index was off 0.8%, to 7,613.24 points, with the electronics subindex giving up 0.5% and the financials subindex dropping 0.6%, Reuters reports from Taipei. 2.48am BST Australian prime minister TONY ABBOTT has said the global economy is not a “one-way escalator”, adding that the instability in world stock markets was a correction after “over-exuberance” in the Chinese market earlier in the year, the AAP news agency reports. “Australians have every reason to face the future with confidence not withstanding the headwinds overseas,” Abbott said. There will be volatility in the markets. There are extraordinary capital flows around the world at the moment, in part linked to speculation about the US federal reserve increasing rates. Frankly, you’ve got to see through the volatility and look at the fundamentals and the fundamentals are Australian companies are profitable, they’re well run and Australia is in a very good position for the future. 2.42am BST And then, six minutes into trading: Shanghai Composite turns negative. China shares: Shanghai Composite up 0.53% at the open after rate cut, but back in negative territory after 6 mins trade. Long day ahead. 2.39am BST Reuters files this snap summary from China openings: China’s major stock indexes opened up on Wednesday after aggressive monetary easings announced by the central bank on Tuesday evening following a massive market slide. The CSI300 index rose 0.7% to 3,062.57 points, while the Shanghai Composite Index gained 0.5% to 2,980.79 points. 2.31am BST Shanghai composite is up by 0.98% in its first 15 minutes. 2.25am BST The US dollar has so far avoided any significant drops against the yen, bringing some cheer to Japanese policymakers, who had voiced concern about the Japanese currency’s surges earlier in the week. A weaker yen is a central part of Japanese prime minister SHINZO ABE’s quest to boost profits for his country’s auto and consumer electronics manufacturers. A strong yen, however, eats into exporters’ profits once they are repatriated from overseas. 2.20am BST Will no one think of the billionaires? Bloomberg says 24 billionaires saw their wealth fall by more than $1bn on China’s Black Monday. 2.11am BST REUTERS reports from Manila that gold has edged up this morning following its biggest drop in five weeks, as global equities were revived after China cut interest rates and bank reserve requirements to support a flagging economy. But China’s move appears to have only boosted equities temporarily, with US stock futures resuming their descent and Asian shares slightly lower. Further losses in equities could switch appetite back to safe-haven assets such as gold. 2.05am BST Meanwhile, back to China, where all is rosy, according to Xinhua, the state’s official news agency: Despite the tumbling of stock markets, investors should forgo their unnecessary anxiety over China because the long-term prediction for China’s economy still remains rosy and Beijing has the will and means to avert a financial crisis. The plunge of stocks, the depreciation of China’s currency and its slowing growth pace after years of high-speed development have all put a question mark on the health of the world’s second largest economy. 2.00am BST Here’s a reminder of how things looked from the US at the close of Tuesday, with the Nasdaq, the Dow and the S&P 500 all down at the closing bell: 1.54am BST And the Guardian’s JUSTIN MCCURRY sends this from Tokyo: More volatility has hit Japanese stocks this morning, after further losses on Wall Street, a rate cut by China’s central bank and a rebound in European stocks. In the first 15 minutes of trading in Tokyo, the Nikkei fell 39.6 points, or 0.22%, following a drop of nearly 4% on Tuesday. 1.51am BST My colleague TOM PHILLIPS sends this update from Beijing: This what China’s Global Times newspaper has to say this morning about the country’s week of stock market chaos and what it tells us about the wider economy. The Asian stock market followed the fall of the Chinese stock market on Monday, but surged yesterday. This shows that the outside came to realise that the Chinese stock market and the economy are not closely related. The crash has made many people lose heart, but a severe financial or social impact may not come soon. 1.44am BST Markets in SEOUL are open, with the Korea Composite Stock Price Index (Kospi) dropping a little in the first 15 minutes of trading: down 0.45 points (0.02%) to 1,846.18. Samsung Electronics fell 1.48% and Shinhan Financial Group slid by 2.11%, the Yonhap news agency reports. 1.36am BST With the Asian markets set to open shortly following days of turmoil, we will have live coverage here of the latest twists and turns. Tuesday saw world markets continue to seesaw after China’s Black Monday. As my colleague DOMINIC RUSHE reports from New York: The Dow Jones industrial average initially appeared to be bouncing back from “Black Monday” – a day when it crashed more than 1,000 points before ending the day down 586 points. By noon the Dow was up over 300 points as European markets closed up and investors reacted positively to China’s decision to cut interest rates. But the Dow closed 205 points down, or 1.29%. The S&P 500 ended the day down 25 points, 1.34%, and the Nasdaq closed 0.39% down. Related: US stock market gains wiped out to close second volatile day on Wall Street Continue reading...
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