Chinese stocks have been the subject of much concern and speculation in recent weeks. Worries over a potential slowdown in China and a corresponding drop in Chinese equities have fanned the flames of caution. Until yesterday, at least.
Chinese stocks reportedly had their best day in two and a half years yesterday, rising by four percent. According to cnn.com, the benchmark Shanghai Composite Index saw significant gains “after a rare concerted intervention by senior officials to talk up the country's struggling economy and markets.”
It’s no secret that the Chinese market has been a lousy performer this year. The key index has shed some 25% of its value since the beginning of the year as concerns over a slowing economy and the ongoing trade war with the United States have taken a toll.
Monday’s ascent of 4.1% combined with price action in the previous session has seen the stock market rise by almost seven percent in just two trading days.
Official data recently showed that the Chinese economy grew by 6.5% in Q3, which was the weakest rate of growth going back to the financial crises a decade ago.
It is unusual that Chinese officials would come out and comment on the market, and some have seen that as a sign that China could take steps to prevent its markets from declining further. The government has already reduced income taxes and further action could potentially be seen.
European Markets Also Higher Monday
European markets were also higher today and investor sentiment appears to be rising as the new trading week gets under way. While stocks were set for a higher open this morning, they have since given up gains and are trading slightly lower. The gold market is also moving lower today, as improving appetite for risk is likely giving some investors reason to take profits.