NEW YORK, Aug 25 — A cautious rebound in US stock-index futures and crude oil was met with skepticism by investors, with Asian markets bracing for further declines after the global selloff sent the Standard & Poor’s 500 Index into a correction.

While futures on the S&P 500 rallied with US oil in early today trading, contracts on Japanese stocks were mixed and those tracking Chinese indexes signaled another slump.

The risk- off vibe was maintained in currency markets, with the Australian and New Zealand dollars extending losses and the yen holding near a seven-month high. Copper futures retreated for a third day.

“No one enjoys watching markets implode like this, but there’s not much you can do about it, that’s the problem,” James Lee, managing director and head of securities at First NZ Capital Ltd., said by phone from Auckland. It looks likely “that we carry on the recent trend and if we do, it will be a rough day.”

Markets are battling through their most unsettling period since the global financial crisis, with trillions of dollars wiped off the value of equities and commodities to currencies at multi year lows amid concern China’s slowdown could derail the world economy.

The rout gathered momentum yesterday as Chinese stocks plunged, shrugging off government support measures to tumble the most since 2007.

Futures diverge

S&P 500 futures added 0.7 per cent as of 8:13am Tokyo time with contracts on the Dow Jones Industrial Average, with both indexes now in correction territory following three-day slumps of at least 8 per cent. Nikkei 225 Stock Average futures rallied 0.3 per cent in Chicago, after sliding 1.4 per cent late yesterday in Japan.

Futures on the Shanghai Shenzhen CSI 300 Index sank 9.9 per cent in most recent trading. Oil in New York rose 0.3 per cent, barely denting last session’s 5.5 per cent tumble, while copper on the Comex lost 0.4 per cent. The kiwi lingered near a six-year low.

The US experienced a seesaw session yesterday, with the S&P 500 erasing more than four-fifths of a 5 per cent slide before succumbing to losses again and ending the day down 3.9 per cent, its steepest one-day drop in four years. The index is now 11 per cent below its May peak.

Futures on Australia’s S&P/ASX 200 Index signaled more losses, sinking 3.7 per cent after the gauge dropped to its lowest level in two years. Kospi index futures declined 0.6 per cent, while contracts on the Hang Seng Index in Hong Kong fell 2.1 per cent.

Chinese futures foreshadowed more pain for the market seen as the nexus of the current rout. Futures on the FTSE China A50 Index decreased 1.4 per cent in recent trading, after the 8.5 per cent retreat in the Shanghai Composite Index shook investors.

Lost confidence

“Investors in China have lost confidence in the central bank, and it’s a very alarming and difficult situation for the markets,” said Bruce Bittles, chief investment strategist at Milwaukee-based Robert W. Baird & Co., which oversees US$110 billion (RM467.709 billion).

“It ultimately depends on whether the China situation results in a severe economic slowdown. If that happens, it’s going to ripple through the US.”

Oil drove the Bloomberg Commodity Index to its lowest level since August 1999 Monday, with West Texas Intermediate crude sliding to a 6 ½-year low. WTI climbed to US$38.37 a barrel in early Tuesday trading, ahead of an update Wednesday on the state of US crude stockpiles.

Copper futures due in December fell to US$2.2385 a pound after touching a six-year low last session. Gold for immediate delivery fell a second day, losing 0.2 per cent to US$1,152.45 an ounce after slipping 0.5 per cent yesterday.

The Dow Average lost 588 points, or 3.6 per cent, yesterday in a day of violent swings. The gauge plunged almost 1,100 points in the first five minutes of trading before roaring back to trim its loss to less than 300 points.

The Nasdaq 100 Index sank nearly 10 per cent at the open, only to close lower by 3.8 per cent.

Surging volumes

The Chicago Board Options Exchange Volatility Index jumped 45 per cent to 40.74, the highest level since October 2011. The gauge known as the VIX more than doubled last week, soaring 118 per cent to 28.03. About 14 billion shares traded on US exchanges, the most in more than four years and the second- highest value traded ever, according to Ana Avramovic, a US strategist at Credit Suisse Group AG.

Some prominent money managers and forecasts said the selling has gone too far, too fast. Jonathan Golub, chief market strategist at RBC Capital Markets, says the bloodbath in biotechnology and tech stocks is temporary, and investors should buy back the best performers of 2015.

Laszlo Birinyi, the investor whose bullish calls have repeatedly come true since 2009, says that while the selloff lashing global equities is painful, its cause is no mystery—and that’s a reason for optimism.

“When the issues are on the table, the market will do what it has to to adjust and come out OK on the other end,” Birinyi, the president of Birinyi Associates in Westport, Connecticut, said in an interview on Bloomberg Radio’s “Surveillance” with Michael McKee. “That other end may be a while, and it may not be fun getting there.”

Doug Ramsey, the chief investment officer of Leuthold Weeden Capital Management LLC, whose quantitative research into market breadth, valuation and investor sentiment foreshadowed the drubbing in American stocks last week, says the selling will worsen. — Bloomberg