US stocks dip as NYSE suffers outage, China rallies

US stocks were sharply lower on Wednesday after market turmoil in China rocked market sentiment.

An outage at the New York Stock Exchange only fuelled unrest as the S&P 500 dipped 1.7 per cent and into negative territory for 2015, falling below its 200-day moving average for the first time in nine months.

The Dow ended down 1.5 per cent, as fears about China’s stock markets rattled investors. US shares could face more uncertainty as earnings season commences, with analysts pessimistic about corporate America’s second quarter.

However, efforts by Chinese authorities saw shares in Shanghai rise more than five per cent overnight on Thursday, offering some hope for US stocks before the open on Wall Street.

China’s rally boosted European markets, with the FTSE rising more than one per cent and the DAX up 1.7 per cent.

Asian shares were also dragged higher, with the Hang Seng in Hong Kong up nearly four per cent.

China moved to stem a 30 per cent collapse in share prices with measures to curb short-selling and by barring larger investors from selling stocks for the next six months. State-owned companies are being told to buy back shares, while brokerages and fund managers are being given a direct line of central bank liquidity to purchase stock.

Meanwhile, the US dollar retreated against the euro as Greece formally requested a three-year bailout, fuelling hopes that a deal can be reached before its banks run out of cash.

EUR/USD hit 1.1124 at one stage, its highest since July 1st, before paring gains to trade around the 1.1050 handle.

The dollar was under some pressure after minutes from the Federal Reserve’s latest policy meeting showed the bank is worried about Greece and wants to see further improvement in the US economy before it hikes rates.

Sterling snapped a losing streak after touching a month-low on Wednesday against the dollar. GBP/USD was trading near 1.54 after the Bank of England left interest rates on hold at the record low level of 0.5 per cent.