Seoul — European stocks rose on Wednesday, with shares of Volkswagen stabilizing after its emissions rigging scandal triggered a dramatic slide. Wall Street was expected to open higher but Asian markets took a hit from weak Chinese factory data, AP reports. .
KEEPING SCORE: Europe bounced back from the losses in the previous session. Britain’s FTSE 100 was up 1.7 percent to 6,035.67 and France’s CAC 40 rose 0.7 percent to 4,459.95. Germany’s DAX gained 8 percent to 9,643.98. Futures showed that Wall Street was set for a modest rebound. Dow futures were up 0.1 percent and S&P 500 futures gained almost 0.1 percent.
AUTO SLUMP: Shares of Volkswagen rose about 4 percent in midday trading, snapping a three-day losing streak. Volkswagen’s stock price nosedived over 30 percent in two days after it admitted cheating the emissions testing affecting half a million cars sold in the U.S. On Tuesday, the world’s top-selling carmaker said some 11 million of its diesel vehicles worldwide were fitted with the same software that defeated U.S. emission tests. Shares of Asian automakers slid earlier on Wednesday, erasing gains from the previous session that appeared to stem from expectations Asian automakers would expand market share at VW’s expense. In Seoul, shares of Hyundai Motor Co. sank 4.3 percent and its affiliate Kia Motors Corp. dropped 3.4 percent.
ANALYST’S TAKE: Volkswagen news “spooked investors to take a step back on auto equities,” said Bernard Aw, a market strategist at IG in Singapore. “This coupled with flimsy market sentiments made for an explosive cocktail of risk selling,” he said. “Nonetheless, market participants are still wrapping their heads around the timing of the Fed rate hike. The implied probability from the Fed fund rate futures market eased to 41 percent yesterday from 49 percent on Monday, which could be due to the risk-off mood.”
CHINA DATA: Asian markets were hit by evidence of weakness in Chinese manufacturing. The preliminary Caixin/Markit manufacturing index based on a survey of factory purchasing managers fell to 47.0 points this month, the lowest level in six and a half years. Numbers below 50 on the index’s 100-point scale indicate contraction. The survey showed that China’s manufacturing has further weakened, with faster contraction in factory output, export orders, overall new orders and employment.
ASIA’S DAY: Hong Kong’s Hang Seng sank 2.3 percent to 21,302.91 and South Korea’s Kospi fell 1.9 percent to close at 1,944.64. China’s Shanghai Composite Index dropped 2.2 percent to 3,115.89 and Australia’s S&P/ASX 200 shed 2.1 percent to 4,998.10. Stocks in Southeast Asia were also lower. Japan’s stock market is closed until Thursday for public holidays.
ENERGY: Benchmark U.S. oil was up 38 cents at $46.74 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell 85 cents to close at $45.83 a barrel in New York.
CURRENCIES: The U.S. dollar strengthened to 120.21 yen from 120.01 yen on Tuesday. The euro gained slightly to $1.1151 from $1.1134