US shares rebound after opening losses

US shares suffered steep losses early on Wednesday before rebounding by early afternoon.

The three leading market indexes opened down more than 1%, following reports of weaker than expected manufacturing activity in China.

But sentiment shifted by 2pm, when the Dow Jones, S&P 500 and Nasdaq were marginally higher.

European markets followed a similar path. In London, the FTSE 100 closed up about 0.1%.

After a rough-and-tumble 2018 – which saw some of the steepest declines on global stock markets since the financial crisis – the outlook for financial markets this year is mixed.

London’s 100 share index performance 2018

Analysts expect economic slowdowns in key countries in 2019, including China and the US, fuelling investor angst.

Political questions, including over Brexit and US President Donald Trump’s trade battles with China and Europe, have added to those fears.

Central banks are also shifting away from the fiscal stimulus that has kept the cost of borrowing low in the years after the financial crisis.

The most immediate cause for concern however were figures out on Wednesday that showed activity in China’s manufacturing sector contracted in December for the first time in more than two years.

Manufacturing activity in the US also shrank.

The shutdown of the US government, triggered by Mr Trump’s standoff with Congress over funding for a wall along the Mexican border, has added to the concerns.

By mid-afternoon trade in New York, the Dow was up about 0.2%, the S&P 500 had gained more than 0.3%, while the Nasdaq had climbed about 0.8%