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Global Equity Markets Rebound after China’s Regulator Said It Wants to Improve Market Liquidity

The major U.S. stock indexes were helped early Monday by the announcement of IBM’s acquisition of Red Hat and the news that German Chancellor Angela Merkel would not seek a fifth term as Germany’s leader.However, conditions turned sour following a Bloomberg News report that said the United States is preparing new tariffs against all remaining Chinese imports.
James Hyerczyk
Asian Markets

U.S. stock futures are pointing toward a higher opening on Tuesday, helped by mostly positive markets in Asia. The catalyst behind the rebound is a recovery in mainland Chinese stocks following comments from the country’s securities regulator.

According to reports, the rally in the mainland Chinese stock market started after the country’s securities regulator said it would improve market liquidity and guide more long-term capital into the market.

At 0444 GMT, the Shanghai Index is trading 2560.38, up 18.28 or +0.72%. In other markets, Japan’s Nikkei 225 Index is at 21455.65, up 305.85 or +1.45% and the S&P/ASX Index is at 5790.80, up 62.60 or +1.09%.

The China Securities Regulatory Commission turned the market higher after it said it will encourage share buybacks and mergers and acquisitions by listed firms, reduce unnecessary interference in trading, and create a level playing ground for investors.

U.S. Stock Market

The major U.S. stock indexes were helped early Monday by the announcement of IBM’s acquisition of Red Hat and the news that German Chancellor Angela Merkel would not seek a fifth term as Germany’s leader.

However, conditions turned sour following a Bloomberg News report that said the United States is preparing new tariffs against all remaining Chinese imports if trade talks between Presidents Donald Trump and Xi Jinping fail to reconcile the ongoing trade dispute.

Overseas Economic Data

Early Tuesday, the Japanese government announced that the seasonally adjusted unemployment rate fell to 2.3 percent in September from 2.4 percent in August. However, investors said this news shouldn’t have much of an effect on Japanese stocks since many companies derive most of their earnings from overseas activities.

In Australia, building approvals rebounded modestly in September, partially recovering some of the steep falls recorded in August.

According to the Australian Bureau of Statistics (ABS), approvals rose 3.3% to 17,081 in seasonally adjusted terms in September, coming in marginally below the median economist forecast that was looking for a larger increase of 3.8%.

August’s decline, originally reported at 9.4%, was revised to show a slightly smaller yet still ugly plunge of 8.1%.

From a year earlier, total approvals fell by 14.1%, cementing the view that Australia’s residential construction boom is now past its cyclical peak.

In other news, Reserve Bank of Australia Assistant Governor Michelle Bullock warned that the costs to the banks of dealing with their misconduct will “permanently impact” their profits as they are forced to change their business models.

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