Chinese stocks rebound despite economic malaise in the country; Aussie hits new lows

Wednesday marked another steep slump for Asian stocks with the Aussie falling to a six-year low amid concerns over lingering slowdown in China, though mainland stocks recovered from a sharp selloff in the morning.

The Shanghai Composite Index staged a striking rebound going into the midday break, as mainland brokerages were suspected of plowing cash into the market, at Beijing’s direction. Analysts said the Chinese government wants to cheer up domestic investors ahead of a key two-day celebration in Beijing commemorating the end of World War II. The government has planned a parade attended by world leaders Thursday.

China’s main stock benchmark was last down 0.20% at 3,311.43, after falling nearly 5% immediately after the open.

Earlier Wednesday, a report by the Securities Times said a total of 50 brokerage companies will pump over 100 billion yuan into a market stabilization fund overseen by the state-run China Securities Finance Corp. The money will be invested in blue-chips. China’s leading securities firms, including Citic Securities, Huatai Securities and GF Securities have all issued statements saying they will raise their share purchases.

However, the Shanghai gauge has now dropped nearly 3% in three trading sessions, since China’s economic slowdown is weighing on the growth of its neighbors kept performance weak in the region, pushing down global markets overnight. U.S. stocks tumbled 2.8% Tuesday, putting the Dow Jones Industrial Average  down 9.9% year to date.

Elsewhere in the Asia trading, the S&P ASX 200 was last up 0.4% and the Hang Seng Index was down 1.01%. Tokyo's Nikkei was last down 0.39%.

The Australian dollar fell below $0.70 for the first time since 2009, after data released earlier signaled the country’s economy grew by an annualized 2% in the second quarter, less than the 2.2% economists had expected. AUD/USD is currently at 0.7023, 0.20% higher.