NEW YORK • A rally in stocks that sent a global benchmark up for six straight days sputtered and industrial metals fell as a resumption in Chinese trading underwhelmed investors amid signs that global growth is faltering.
The MSCI All Country World Index was little changed after rising 6.9 per cent over the previous six sessions, while futures on the Standard & Poor's 500 Index dropped and copper slid for the first time in five days.
The Shanghai Composite Index rose just 3 per cent after a week-long holiday during which a Hong Kong benchmark rallied 11 per cent.
The disappointment in China was compounded by data showing German exports slumped in August by the most since the height of the 2009 recession, underscoring the brittleness of global trade.
On top of that, the International Monetary Fund downgraded its economic outlook on Wednesday, citing concern about how emerging markets will fare when US rates increase.
"The Chinese equity market re-opened and bounced, but not as much as some hoped, and that was enough for a reversal of the recent risk rally," Mr Kit Juckes, a strategist at Societe Generale SA in London, wrote in a note.
The question is whether the rebound in emerging-market currencies, "equities and commodities represents a chance to sell, or a turn in the trend and the start of a fourth-quarter rally", he said.
A report in the US yesterday showed filings for unemployment benefits fell last week to the lowest level since mid-July, a sign that managers are reluctant to trim staff levels because domestic demand is holding up in the face of diminished global growth expectations.
Commodities Industrial metals retreated amid signs of a weak demand outlook in China, the world's second-biggest economy.
Copper fell from the highest closing price in more than two weeks. Zinc slid 0.8 per cent and nickel lost 0.7 per cent.
Gold traded near its highest level in more than a week as investors awaited minutes from the Federal Reserve meeting for clues on the timing of an interest rate increase.
Gold for immediate delivery slipped 0.5 per cent to US$1,139.44 an ounce after jumping to its highest level since Sept 25 on Wednesday.
Oil traded near US$48 a barrel in New York after a three-day rally fizzled out on Wednesday following an increase in US crude stockpiles and production. Brent crude added 0.8 per cent to US$51.74.
The flight to safety also extended to currencies, with the Swiss franc appreciating 0.4 per cent against the dollar, the euro climbing 0.3 per cent to US$1.1273 and the yen gaining 0.1 per cent versus the US currency to 119.88.
"Perhaps knowing that any upside in China is a result of catch-up action, market participants in Asia are not overly keen to continue the rally we have seen during the past few sessions," said IG market analyst Bernard Aw.
BLOOMBERG
