NewWall Street, global markets rebound from China slump as strong US data helps

Stock markets around the world rallied on Thursday, shaking off a slump related to China growth fears, as strong US economic data boosted investor sentiment and crude oil rebounded sharply.

All three major US indexes closed up more than 2 per cent, putting them higher for the week, following share rebounds in China and Europe. Increased appetite for risk sent government bonds and the Japanese yen down Wednesday while the dollar rose.

Annual US gross domestic product growth was revised to 3.7 percent from the 2.3 percent rate reported last month and last week’s jobless claims fell more than expected.

"Can the US economy prove the naysayers wrong? Well, so far it has been able to do that and today’s data really puts a line under that," said Peter Kenny, chief market strategist at Clearpool Group in New York.

The data came after New York Fed President William Dudley had said Wednesday that arguments for a September rate increase "seem less compelling" than only weeks ago, given the threat posed to the US economy by recent market turmoil.

On top of these factors investor nerves in China and Europe were helped overnight by Wall Street’s Wednesday rally, as well as strong lending data from Europe, according to John Canally, Chief Economic Strategist for LPL Financial.