Global investors limp into the fourth quarter of 2015 nursing the worst returns since the credit bust of 2008.]]> |||
Global investors limp into the fourth quarter of a volatile 2015 nursing the worst financial market returns since the credit bust and banking collapse of 2008 and with few hopes of making up ground before the end of the year.
Of 21 major financial benchmarks tracked by Reuters, only two are up so far this year as slowing growth – most worryingly in China – an emerging market crisis and prolonged uncertainty on when US interest rates might rise have slammed markets around the world.
The exceptions – the US dollar and 10-year US Treasury bonds – have historically been seen as cash-like havens and have posted returns of 6.2 percent and 2.5 percent, respectively.
In the three months to September, they rose 0.4 percent and 3 percent, respectively, with US-based government Treasury funds drawing seven straight weeks of inflows totalling $10 billion (R138bn).
Only German and Italian government bonds joined the dollar and Treasuries in positive territory during the quarter.
That leaves investors in a quandary: do they throw caution to the wind in the fourth quarter and attempt to claw back their losses? Or do they hunker down and ensure that the damage done in the previous three does not get any worse?
Certainly, the investment backdrop got dramatically more challenging in the third quarter.
The volatility in those three months accounts for most of the year-to-date damage investors have suffered, and in some cases all.
The biggest year-to-date declines have been in copper (21 percent), emerging market equities (18 percent) and Brent crude oil (16 percent), the data show.
Billionaire US activist investor Carl Icahn is convinced a serious downturn is looming.
“I am more hedged than I have ever been,” Icahn said this week.
Equities had a poor quarter, and not just in the emerging world.
The Standard & Poor’s 500 had its worst three-month performance in four years and Japan’s Nikkei had its worst since the three months after Lehman Brothers collapsed in late 2008.
Investors in other markets suffered much bigger losses in the three months to September 30.
Chinese A shares listed in Shanghai plunged nearly 30 percent and Brent crude oil shed a quarter of its value.
Analysts have been falling over themselves in recent weeks to issue the most bearish outlook on commodities and emerging markets. Among the most notable was Goldman Sachs’s note earlier this month that oil could fall as low as $20 a barrel.
Such dramatic price swings often herald an imminent reversal.
JP Morgan Asset Management’s strategists are not alone in retaining a positive outlook for the fourth quarter, arguing investors have simply become too bearish.
“Given that we consider US recession risk to be low, the returns offered by higher-quality high-yield credit are now attractive relative to equity,” they wrote in a recent client note.
“We keep our optimism on the US economic outlook and as such remain overweight on developed market equities versus emerging markets, and overweight the US dollar versus emerging market currencies,” they added.
The dollar was the best-performing asset of all in the third quarter, rising 6 percent against a basket of major counterparts on expectations the Federal Reserve will soon lift US rates and as investors sought a safe port in the emerging-market storm.
In its latest Global Financial Stability report published on Tuesday, the International Monetary Fund warned that emerging market firms, which have amassed a record $18 trillion of debt, need careful monitoring as the era of record low interest rates nears its end. – Reuters]]>
We need to do away with policies that put up barriers to trade.]]> |||
Arguments supporting and opposing the existence of an “African identity” have been bandied about for generations.
Are we African if we live in Africa? Or are we African because we were born in Africa? Perhaps we’re African because of where our ancestors came from, or simply because we’re not American, European or Asian.
Maybe, as individuals, we don’t identify as African at all, but as Senegalese, Zambian, Ghanaian, Ethiopian, or whatever national moniker we identify with.
Wherever your thinking takes you with regard to the African identity, there’s one thing that is undeniable – Africa has enormous potential to become a veritable powerhouse of trade and industry in the global economy.
We have been stuck within our (arbitrarily created) borders for far too long.
It’s time we started taking our individual roles seriously in terms of creating unity on the continent.
I am not talking ideological unity here, but rather economic unity.
This means pulling together as a region to extract maximum benefit from what we have to offer each other.
In North America, 40 percent of cross-border trade is done with other North American countries.
In Europe, that figure is 60 percent. In Africa, it’s 12 percent.
We have to ask ourselves why.
Why, on a continent that occupies 20 percent of the world’s land mass, and houses 20 percent of the world’s population, are we not looking to our neighbours when seeking out trading partners?
Africa is the size of the US, India, China and western Europe combined, yet these are the countries we turn to when we want to trade.
To make matters worse, a lot of what we export, in the form of raw materials, gets used to manufacture goods that we simply import back to the continent!
In case study after case study we see the benefits of increased intra-regional trade, including sustainable economic growth, skills development, reduced input costs, lower consumer prices, increased access to research and innovation, infrastructure development, reduced reliance on external economic factors, improved international relations, increased regional tourism, development of a strong regional identity, and greater potential to earn export income and attract foreign investment.
These benefits can be enjoyed by all participating countries, regardless of their relative economic strength.
The poorer nations benefit as much as the richer ones do.
What do we have going for us?
- A collective mindset for overcoming adversity: We Africans are resilient and determined. Channelled in the right way, the African resolve can make miracles happen.
- Vast resources: Our continent still has enormous untapped reserves of minerals, oil, gas, and uncultivated arable land.
- An active industrial base: Africa has burgeoning industries in a number of sectors, including agriculture for export, banking and financial services, information and communications technology, and tourism, all of which can be shared, used and built upon by the whole continent.
- A young population and a growing middle class: There are 500 million people under 35 living in Africa, with more and more people lifting themselves out of poverty each year.
Granted, Africa still only accounts for 3.5 percent of the world’s economy.
But we are moving, albeit slowly, in the right direction.
There are several things that need to happen before we can reach our full potential and move up from the 12 percent mark.
Firstly, we need to work together.
We must assign an organisation the responsibility to drive trade between African countries – and we all need to buy into the process. If it remains a sub-clause in economic policy at country level, it will never happen.
Secondly, we must look at home first.
Our primary port of call should always be in Africa when we’re looking for trading partners.
Even at consumer level, we should be looking for the Made in Africa label.
The Made in America campaign has been hugely successful in the US.
I recently heard a story of a clothing store in New York that placed identical T-shirts in two separate piles.
The manager marked the one pile Made in America and added 20 percent to the price.
That was the pile that sold out first.
We need to cultivate the same sort of pride here in Africa.
Thirdly, we need to play to our individual and collective strengths.
Centres of excellence are springing up all over Africa.
We add value, drive synergy, start new hubs of industry and create a continental economy that has the critical mass to start calling the shots on the global stage.
Lastly, and probably most importantly, African nations need to start implementing policies that make it easier to do business with each other.
And we need to do away with policies that put up barriers to trade.
This is vital if we want to develop internal economies.
We also need include informal trading in our thinking.
It’s difficult to put a number on it, but informal trading in Africa is massive.
Often, trade is impeded by onerous visa requirements, customs issues, currency problems.
There are also the ugly, yet ubiquitous issues of corruption and harassment to consider.
Imagine if the women engaged in informal cross-border trade in many African countries could buy and sell their produce at will, without facing a constant threat of violence, sexual harassment and bribery.
Or if the labourers from Mozambique could cross into South Africa without having their passports stolen by corrupt border officials.
None of this is impossible.
I believe that what unites us as Africans is a mutual understanding of what it means to be human.
We recognise each other as individuals. We have a deep-seated instinct and desire to help each other.
Arbitrarily drawn borders have constructed false divisions.
I believe we can overcome these divisions to generate the innovation, skills, industries and markets we need to become economically significant globally.
But it must start at home. It must start here, in Africa.
Ezra Ndwandwe is the convener of the upcoming African Business Leaders Forum and a promoter of entrepreneurship. His initiatives include entrepreneurial TV show, The Big Break Legacy, and a Johannesburg business incubation facility.]]>
There are similar tales of misfortune across the continent, with the impact felt on both the poor and the middle class.]]> |||
Tarkwa, Ghana - In the boom times when the price of gold was soaring, Ebenezer Sam-Onuawonto had a dream job and a dollar salary many times the national average in this mining town in southwestern Ghana.
When the price fell, he lost his job as human resources chief at a mining company that closed its local operations and could only find work in a construction firm in another city, far from the house he built in Tarkwa for his wife and six children.
“I hardly see my kids now,” said Sam-Onuawonto, his life changed as a result of a slump in global commodity prices whose impact is being felt around the world on currencies, companies, consumers, national economies and - potentially - governments.
At one end of the wealth scale, the rout has affected huge companies such as Swiss-based trading and mining company Glencore, whose market value has shrunk in the past year. At the other end, it holds the key to the fate of entire communities dependent on the raw materials they produce.
In Tarkwa, a town of 34,000, production of gold continues but several firms have stopped work or laid off staff in the last two years as the effects of the price slump trickled down.
One African bank has shut its Tarkwa branch, bars and hotels are emptier and the streets are less clogged with traffic as people struggle with new financial problems.
“Since the fall in the gold price, things have never been the same,” said Yvonne Mensah, who has seen business wilt at the stationary shop she runs from a converted shipping container.
Ghana as a whole, once Africa's star economy, is suffering. Not only is gold it biggest source of foreign exchange but the price of oil, which it also produces, has sunk, it has double-digit inflation and the value of the cedi currency has declined.
There are similar tales of misfortune across the continent, with the impact felt on both the poor and the middle class.
A HUGE BUBBLE
The United Nations Conference on Trade and Development (UNCTAD) says falling commodity prices threaten economic and political stability in developing economies across Latin America, Africa, the Middle East and Asia.
The events are seen by some experts as signalling the end of a commodity “super-cycle” in which prices surged following the rapid industrialisation of China after it opened up in the 1980s.
Countries and companies made huge investments in commodities while prices were still high in almost all energy and raw material markets, but this resulted in oversupply when economies stalled in what had been booming markets.
Many producer countries are paying the price for failing to predict the end of the cycle and not reducing their dependence on commodities.
The most important factor in the price slump is seen as the economic slowdown and drop in demand in China, though downturns in Indonesia, Malaysia and developed economies such as Japan and South Korea have also contributed to the situation.
Commodity-producing powerhouses such as Brazil, Australia, South Africa and Russia are now in economic downturns. A halving of the oil price in the past year has been especially painful for Russia, also hit by sagging metals and mining prices.
“Hundreds of billions of dollars were spent in new oil, natural gas, iron ore, coal and many other commodities in the expectation that China would continue to grow insatiably forever,” said Frederic Neumann, Co-head of Asian Economic Research at HSBC in Hong Kong.
“That's changed, so many of the investments made by governments and companies now look really bad, and that's hitting economies and company stocks hard ... It's been a huge bubble, a massive misallocation of capital which now has to be wound down.”
There are some beneficiaries, such as consumers in developed nations including the United States who are enjoying lower gasoline prices at the pump, but the developed world is far from immune to the decline in prices.
U.S. Federal Reserve Chair Janet Yellen said last month the decline in commodity prices was one of the main reasons a 2 percent inflation target had been missed. The Fed is keeping Americans waiting for a long-expected interest rate rise.
Britain has also felt the impact. SSI UK, a unit of Thai steelmaker Sahaviriya Steel Industries, announced last month that it was mothballing its iron and steelmaking plant at Redcar in northeastern England after the fall in steel prices this year and axing about 1,700 jobs.
Eugene Purvis, 56, a planner for crane maintenance who is being made redundant, said the town of more than 35,000 had been gradually declining and may never recover.
“It could be the demise of the place,” he said by telephone. “Redcar was a lovely place. If you go on the Internet and look through old photographs, it was a lovely place. If you see any photographs now it's decimated,” he said.
“It was that bad that even McDonald's closed. Shop after shop, even charity shops are closing.”
LOSS OF FAITH
Even wealthy countries in the Middle East are feeling some impact, with low oil prices hitting government revenues, creating huge budget deficits in some countries.
Some governments in the Gulf are being forced to run down assets abroad and to consider rationalising spending, with some even starting to cut consumer subsidies for fuel and energy long seen as part of a social contract with their citizens.
It would take a long downturn for the Middle East to suffer more but investors globally are increasingly losing faith that there will be a strong recovery by commodity prices and expect companies and countries reliant on the sector to hit trouble.
The World Trade Organization (WTO) has downgraded its global trade forecast from 3.3 percent to 2.8 percent for 2015, half the annual average of 1990-2008.
Specialised commodity merchants, which have less stable income from assets and rely on healthy trading activity, are feeling the heat.
Publicly listed firms such as Glencore, one of the world's largest resource companies, and commodity merchant Noble Group have seen their stock price and market capitalization evaporate while their credit default swap (CDS) prices - the cost of insurance against a firm's bankruptcy - have soared.
Some experts watching the fall in the value of Glencore have asked whether this is a “Lehman Brothers moment”, a reference to the financial services firm whose collapse in 2008 was followed by a global financial crisis.
Most say the answer is “No”. Even so, traders, companies and even governments are watching nervously.
“The energy and commodity complex is being shaken to its very core. The cause is a combination of geopolitics, supply and demand imbalances, technological advances and leverage,” investment bank Jefferies said in a note to clients.
“A further collapse in energy prices could bring an increase in geopolitical risk, and clearly the most leveraged players will need to quickly address their capital structures or succumb to the marketplace, which can be both swift and unforgiving.”
Gains for European and Asia stocks capped a wild week for financial markets on Friday.]]> |||
London - Gains for European and Asia stocks capped a wild week for financial markets on Friday, ahead of a key U.S. jobs report that could determine the chances of the Federal Reserve raising interest rates before year-end.
Concerns about US monetary policy and slowdown in emerging markets led by China have hit commodities markets and related stocks like Glencore and sent credit spreads wider this week in the wake of a summertime surge in volatility.
An escalation of fighting in Syria, with Russian air strikes marking its biggest Middle East intervention in decades, has so far failed to spook global markets beyond a rise in oil prices, however, and global equities are set to end the week flat.
“European equities are trading higher this morning, trying to stage a hesitant rebound after yesterday's bearish market action,” said Markus Huber, a trader at Peregrine & Black.
“While a very strong [US data] reading would certainly increase the likelihood of a rate hike this year, very few expect that the Fed will pull the trigger as soon as October.”
The pan-European FTSEurofirst 300 up 0.8 percent, while German Bund futures were little changed.
The US dollar index was slightly higher ahead of nonfarm payrolls data expected to show the US economy added 203 000 jobs in September, according to a Reuters poll.
While years of cheap central bank cash in the wake of the 2007-2008 financial crisis have fuelled asset prices, recent signs of a slowdown in global economic growth and the Fed's decision last month to put off a rate rise have spooked investors betting on a return to more normal policy.
Mixed data on Thursday failed to give more clues, with the pace of growth at US factories slowing in September while new jobless claims pointed to a tightening labour market.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.3 percent, and was on track for a weekly gain of 1.2 percent after posting its poorest quarterly performance since 2011 with a decline of 17 percent.
Australian shares fell 1.1 percent while Japan's Nikkei Average fell 0.4 percent. Chinese markets are shut for a week-long holiday with India also closed on Friday.
Beijing said on Wednesday it would cut the minimum down-payment for first-time home buyers in many cities, the second policy measure in two days to fire up Chinese consumption.
“Even if this might not have much impact on property prices, it shows the central government has policy intentions to boost GDP growth,” said Castor Pang, head of research at Core Pacific-Yamaichi in Hong Kong.
On commodities markets, U.S. crude rose 55 cents to $45.29 per barrel while Brent rose to $47.95. Copper was set to snap a two-week decline as investors bet production cuts would support prices, though concerns about demand from top consumer China remained.
Hong Kong shares rise on Friday, pulling away from the two-year lows hit earlier this week.]]> |||
Hong Kong - Hong Kong shares rose more than three percent on Friday, pulling further away from two-year lows hit earlier in the week, as investors cheered moves by China to prop up its sluggish property market and cooling economy.
Casino stocks jumped after data showed a smaller drop in gambling revenue than in the previous month.
Shares of Galaxy Entertainment surged 10 percent, Wynn Macau gained 7.4 percent, Sands China rose 6 percent and SJM Holdings climbed 6.4 percent.
The benchmark Hang Seng Index rose 3.2 percent to 21,506.09 points. It had a weekly gain of 1.5 percent.
The stock market, which plunged more than 20 percent in the third quarter largely on worries about mainland China, was closed on Monday and Thursday for public holidays.
The China Enterprises Index, which tracks Chinese companies listed in Hong Kong, climbed 3 percent to 9,686.64, lifted by a 13 percent jump in shares of Great Wall Motor after China cut taxes on small cars.
Britain’s top share index rises on Friday as regulatory pressure eases on the country's banks.]]> |||
London - Britain's top share index rose on Friday as regulatory pressure eased on the country's banks, setting the index on track for a weekly rise.
Banks gained after Britain's financial regulator said it planned to impose a two-year deadline for customers to claim compensation for mis-sold loan insurance, drawing a line under Britain's costliest consumer finance scandal.
Royal Bank of Scotland, Barclays, Lloyds and Standard Chartered all rose 1.9-3.1 percent.
“These liabilities have been casting something of a shadow over the sector, not least owing to the difficulties in quantifying their scale, plus the implications of recent judicial rulings,” said Tony Cross, a market analyst at Trustnet Direct.
Britain's FTSE 100 was up 62.51 points, or 1 percent at 6,134.98 points by 0757 GMT, taking the index into positive territory for the week.
The FTSE 100 posted its biggest quarterly decline since 2011 in the third quarter, which ended on Wednesday, but it has now risen for three straight session.
The gains were broad-based, with only six stocks falling. Experian declined the most, dropping 4.4 percent and heading for its worst session in 18 months. The company disclosed a data breach that exposed the personal information of some 15 million people who applied for service with T-Mobile US.
“Undoubtedly a breach of this magnitude is a major setback, especially to a company that takes data security very seriously ... Experian's business is that of handling data, which makes this incident particularly embarrassing,” analysts at Barclays said in a note.
“T-Mobile is obviously reviewing its relationship with Experian. In itself the loss of one client is fairly immaterial but if it triggers other account reviews, it could become more significant.”
South Africa's rand edges up against the dollar in early trade on Friday.]]> |||
Johannesburg - South Africa's rand edged up against the dollar in early trade on Friday, with traders and analysts expecting the currency to get its steer mainly from US employment data due out later in the session.
Government bonds opened slightly weaker but the stock market got off to a firm start, with the benchmark JSE Top-40 index adding 0.8 percent to 45,610 while the broader All-share rose by the same margin to 50,911.
By 07h05 GMT the rand was trading at 13.8700 per dollar, up 0.37 percent from Thursday's New York close.
Traders however said the rand remained vulnerable to bearish sentiment after failing to hold on to earlier gains in the previous section.
Emerging markets in general could also come under pressure if jobs numbers out of the United States surpassed expectations, building the case for an interest rates hike this year in the world's biggest economy.
“The rally in the rand over the last two days may be at an end,” Standard Bank trader Oliver Alwar said. “The technical picture suggests that more rand weakness is on the cards.”
In fixed income, the yield on debt maturing in 2026 ticked up 1 basis point to 8.425 percent.
Asian stocks look likely to end the week with small gains.]]> |||
Hong Kong/Tokyo - Asian stocks edged up on Friday and looked likely to end the week with tiny gains, although the outlook remained grim as investors continued dumping emerging market assets as their growth expectations faded. The dollar crept higher.
While Thursday's private and official surveys of China's factory sector weren't quite as bad as some had feared, a number pointed out the broader economic outlook for the region remained bleak.
“The difference between new orders and inventories is a good leading indicator for industrial production in Asia,” said Frederic Neumann, co-head of Asian economics research at HSBC in Hong Kong. “Unfortunately, this signals a further deceleration of activity into the year-end.”
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.3 percent, and was on track for a weekly gain of 1.2 percent. It posted its poorest quarterly performance with a decline of 17 percent, the worst since 2011.
Hong Kong's shares led gainer markets with the index rising 2.1 percent in opening trades. Japan's Nikkei Average fell 0.6 percent. China's markets will be closed until October 8 for the National Golden Week holidays.
In line with falling economic activity, earnings growth expectations for the remainder of the year for MSCI Asia-ex Japan have been slashed to their lowest levels this year, according to Thomson Reuters data.
Net non-resident portfolio flows to emerging markets were negative for the third consecutive month in September, with investors estimated to have pulled out $40 billion worth of funds in the third quarter, making it the worst since December 2008, according to the Institute of International Finance.
Nowhere was this flight from emerging market assets more evident than in the bond markets with a spread measuring the gap between US high yield and investment grade debt at its highest level in more than three years at 430 basis points, according to Thomson Reuters data.
In foreign exchange markets, the dollar is holding its own against other currencies before a key US jobs report that could determine the chances of the Federal Reserve raising interest rates before year-end.
Economists expect US nonfarm payrolls, due later in the global day, to show that employers added 203 000 jobs in September, according to a Reuters poll.
“Fed Chair Yellen has already mentioned that labour conditions are improving and hinted that developments overseas, notably in China, and prices, were chief concerns,” said Shinichiro Kadota, chief Japan FX strategist at Barclays in Tokyo.
“A very bullish report would of course have a big impact. But the Fed may not make its rates decision on employment data alone,” he said.
The dollar was buying 119.96 yen, broadly flat from late US trading, while the euro was steady at $1.1180.
The dollar index, which tracks the greenback against a basket of six rival currencies, was down about 0.1 percent at 96.080.
US crude futures were up about 1.3 percent at $45.32 a barrel, after a choppy session in which traders monitored the unpredictable path of storm Joaquin, and whether it would strike the New Jersey coast and possibly disrupt refineries there.
S&P 500 and Nasdaq close slightly higher on Thursday in a choppy start to the fourth quarter.]]> |||
New York - The S&P 500 and the Nasdaq closed slightly higher on Thursday in a choppy start to the fourth quarter as investors waited for the monthly US jobs report and the quarterly earnings season.
After starting with a brief rally, stocks fell before edging up again after the latest in a spate of volatile trading days for an equities market where rallies quickly evaporate amid uncertainty about the global economy and US interest rates.
Many investors were holding fire ahead of Friday's crucial US nonfarm payrolls data and the third-quarter earnings season which starts with Alcoa’s report on October 8.
“We're going to get a number investors can sink their teeth into tomorrow and next week kicks off earnings season which is vitally important to the direction of stocks for the rest of the year,” said Jack Ablin, chief investment officer at BMO Private Bank in Chicago.
The jobs number should give investors reassurance about the US economy and clues as to whether the Federal Reserve will raise US interest rates this month, according to Ablin.
“The Fed is fixated on jobs and its ability to throttle inflation. Meanwhile unless we get a lousy jobs number tomorrow I think the Fed is going to be on the hook to explain themselves if they're not going to raise,” he said.
Data on Thursday showed that the pace of growth at US factories slowed in September, but new jobless claims pointed to a tightening labor market.
Earlier in the day, data from China showed factory activity fell again, but not as much as feared.
The market has been jittery about signs of slowing global economic growth, especially in China.
The Dow Jones industrial average fell 12.69 points, or 0.08 percent, to 16,272.01, the S&P 500 gained 3.79 points, or 0.2 percent, to 1,923.82 and the Nasdaq Composite added 6.92 points, or 0.15 percent, to 4,627.08.
Half of the S&P's 10 industry sectors closed higher led by a 1 percent rise for materials and a 0.9 percent rise for healthcare. Both sectors had their third straight day of gains after a recent bout of selling.
The utilities index's fell 1.2 percent after rising 2.6 percent in September when nervous investors preferred more defensive sectors in a shaky market.
Oil prices settled lower on Thursday after altered weather forecasts snuffed out an early rally. Fears a hurricane could damage US East Coast oil installations had lifted energy stocks earlier in the day.
Shares of Twitter fell 8.4 percent to $24.68, after a report that co-founder and interim Chief Executive Jack Dorsey was expected to be named permanent CEO.
Dunkin Brands fell 12.2 percent to $43.00 after it gave a weak full-year forecast and said it would shut 100 stores.
Declining issues outnumbered advancing ones on the NYSE by 1,733 to 1,262, for a 1.37-to-1 ratio on the downside; on the Nasdaq, 1,774 issues fell and 952 advanced for a 1.86-to-1 ratio favouring decliners.
The S&P 500 posted four new 52-week highs and 27 lows; the Nasdaq recorded 13 new highs and 169 lows.
More than 7.54 billion shares changed hands on US exchanges, slightly ahead of the 7.25 billion average for the previous 20 sessions, according to Thomson Reuters data.
World stocks and commodities rebounded on Thursday after a bruising third quarter.]]> |||
London - World stocks and commodities rebounded on Thursday after a bruising third quarter, as surveys showed Chinese manufacturing activity was stronger than many global investors had feared.
The Purchasing Managers' Index data nevertheless indicated China's manufacturing shrank again in September, suggesting the world's second-largest economy is still cooling more rapidly than expected a few months ago.
Relief the figures were not worse sparked 0.5 to 0.7 percent gains for Chinese stocks. But gains of nearly 2 percent by the Nikkei in Tokyo set the pace as all of Asia made gains.
Germany's DAX rose 1.3 percent, Britain's FTSE gained 0.2 percent and France's CAC advanced 0.9 percent as a global rally that began on Wednesday kept rolling. Wall Street's S&P 500, Dow Jones Industrial and Nasdaq indexes were expected climb 0.6 to 0.9 percent when they open.
Manufacturing PMIs and weekly unemployment claims will set the tone for Friday's non-farm payrolls jobs data, which will feed the debate on a U.S. interest rate increase this year.
“The clouds are clearing a bit. Overall, China is clearly slowing, but what does give me comfort is that its policy dashboard has a lot more buttons to press on it than ours in Europe,” said Neil Williams, chief economist at fund manager Hermes in London.
“I'm now expecting China to cut quite aggressively its interest rates and reserve requirements, and even move towards a fiscal splurge.”
Europe's gains came despite weaker euro zone manufacturing growth, a slowing of new orders and price-cutting that underscored the region's sluggishness.
The PMIs came a day after official data showed consumer prices fell again in September, adding to pressure on the European Central Bank to expand its stimulus programme, already set at more than 1 trillion euros. In currency markets, the dollar rose slightly on expectations the Federal Reserve is still considering its first rate rise in almost a decade later this year.
Along with the soft euro zone figures, that pushed the euro down to 1.1146. The Australian dollar, used as a proxy for China-related trades, had earlier risen 0.5 percent to $0.7058 following the China PMIs.
“The Chinese data was just slightly better and this is lending some confidence to investors,” said Neil Mellor, currency strategist at Bank of New York Mellon. “Having said that, euro/dollar is still stuck within familiar ranges.”
Commodities markets also bounced amid the lull in global risk aversion. Copper and nickel rallied as bearish investors closed out quarter-end positions and Chinese holidays approached.
Industrial metals seemed unaffected by another dive in the shares of commodity group Glencore. Worries about its investment-grade credit rating, which could affect its access to financing, rumbled on despite upbeat broker notes from its bankers, Citigroup, and also Barclays.
Three-month copper on the London Metal Exchange was up 0.2 percent at $5,175 a tonne after hitting two-week highs.
Nickel hovered near a four-week high at $10,550 a tonne as safe-haven gold slid to a two-week low.
Oil also headed higher. U.S. crude was up 2.2 percent at $46.11 a barrel even though data showed a surge in U.S. crude oil and gasoline stockpiles last week. Brent crude rose 2 percent to $49.30 a barrel.
Europe's benchmark bond markets were largely steady as most investors eyed more ECB bond buying and waited for the U.S. jobs data on Friday.
Emerging market stocks and currencies enjoyed the respite. MSCI's benchmark global EM index climbed 0.8 percent as the Brazilian real, Malaysian ringgit, Turkish lira, South African rand and Chilean peso all held their ground.
“The market has simply become too negative, particularly on China,” said Thomas Harr, head of EM research at Danske Bank.