Markets Rally Worldwide

August 27, 2015

On Thursday stocks worldwide rebounded after being down for nearly a week. US markets saw loses for six days in a row, the longest losing streak in the past three years.

Over the last week the Dow Jones industrial experienced a $2 trillion slide following the historic turbulence in the Chinese stock market. Yet on Wednesday the Dow gained more than 600 points, the largest single-day jump since 2008. Similarly, on Thursday the FTSE 100 (London) underwent its most dramatic rally in five years. Markets in Germany and France were also each up over 2%.

At its lowest point the Dow dipped down to 15,666 earlier this week, down nearly 2,500 points from the summer high of two months ago, and even with Thursday’s rebound it remains at levels not seen since October 2014. Yet investors remain optimistic that as markets stabilize we will see steady gains.

This recovery was pushed both by a 5.3% rise in the Shanghai index, its largest gain in eight weeks, as well as a statement from William Dudley, president of the New York Federal Reserve Bank, intimating that the raise in U.S. interest rates scheduled for September is now “less compelling to me than it was a few weeks ago,” in light of recent events.

Interestingly, none of China’s top officials have made comments on the ongoing market instability. With tight controls over Chinese social media in place, and state-run media choosing to place their attention elsewhere, the overall reaction appears to merely turn a blind eye to the financial rollercoaster felt around the world over the last week.

This silence has worried some market analysts, who point out that Chinese debt has quadrupled over the last eight years, and that the Chinese government has cut interest rates five times since November.

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