US Futures Rise 1%; Asian Stocks Mixed After Tuesday's Failed U.S. Rally
New York (Aug 26) Asian stocks closed mixed Wednesday after a big rally in U.S. markets collapsed and left stocks lower. U.S. stock futures are rising anew, though, with S&P 500 futures up 1.4%, Nasdaq futures jumping 1.33% and Dow futures heading 1.3% higher.
Most Chinese indices extended losses despite Tuesday's rate cut and relaxation of banks' reserve requirements. The Shanghai Composite index closed down 1.27% at 2,927.29. In Hong Kong, the Hang Seng closed down 1.52% at 21,080.39.
But in Tokyo, stocks defeated a six-day losing streak. The Nikkei 225 jumped 3.2% to close at 18,376.83 and the Topix moved in tandem to close up 3.23% at 1,478.97.
Meanwhile, investors resumed their selloff of European stocks on Wednesday. In London, the FTSE 100 struggled to stay over the 6,000 mark and by late morning was down 1.34% at 5,999.81. In Frankfurt, the DAX fell 1.12% to 10,015.17, and in Paris, the CAC 40 was down 1.16% at 4,507.55.
Must Read: 10 Big-Name Stocks That Are Already in Correction Territory
In U.S. markets Tuesday rally momentum faded in the final hour of trading after a promising morning that wiped out the losses of "Black Monday."
"This is typical after a wild swing we had" on Monday, Peter Cardillo, chief market economist at Rockwell Global Capital, told CNBC on the step back from highs. "It's just going to take some time for confidence to rebuild in the market."
In U.S. trading Tuesday, the S&P 500 slipped 1.3%, and the Dow Jones Industrial Average closed down 1.3%, or 205 points, while the Nasdaq fell 0.44%. Benchmark indices had each traded more than 2% higher earlier in the day.
Still, many believe the massive losses on Monday may have been an overreaction and that a potential rebound could still be in play.
"The response looks to be completely out of proportion with the economic fundamentals in both countries," Capital Economics economists wrote in a note on Monday's selloff. "Since exports to China account for only 9% of the total and 1.2% of U.S. GDP, even in the unlikely event that China did suffer a hard landing, the impact on the U.S. economy would be muted."
The Dow remained in correction territory, having dropped 14.5% from its May record. The S&P 500 re-entered a correction, down 12.2% from its May record. The Nasdaq also entered a correction after falling 10.9% from its April high.
High-momentum tech stocks hit hard on Monday clawed back from those losses. Netflix (NFLX - Get Report) , Apple (AAPL - Get Report) , Amazon (AMZN - Get Report) , and Facebook (FB - Get Report) were all more than 2% higher. The Technology SPDR ETF (XLK) jumped 2.6%.