Asia Shares Extend Losses On China Factory Data; Europe Recovers, US Stock Futures Up

European stock indexes were trading up Wednesday while U.S. stock futures suggested a positive opening to markets even as Asian markets suffered earlier in the day after a key indicator suggested Chinese factories slowed down more than expected.

China's factory sector shrank for a seventh straight month to its weakest level in six and a half years, according to a purchasing managers' index (PMI) released Wednesday. The data followed the U.S. Federal Reserve's decision last week not to raise interest rates citing global growth concerns, particularly about the Chinese economy. The Asian Development Bank on Tuesday lowered its growth forecast for China to 6.8 percent from 7.2 percent for 2015.

Asian stocks closed largely down Wednesday, with the Shanghai Stock Exchange Composite Index retreating over 2 percent and the smaller Shenzhen Composite Index falling nearly 1 percent. Hong Kong’s Hang Seng Index dropped over 2 percent, while Japan’s Nikkei 225 and South Korea’s Kospi Composite Index both slumped nearly 2 percent. Australia’s benchmark S&P/ASX 200 index was also down 2.07 percent.

While sentiment across Asia remained broadly cautious, shares in India were up slightly. India’s benchmark S&P BSE Sensex index closed up nearly 0.7 percent while the larger Nifty rose 0.4 percent.

Meanwhile, Europe managed to buck the trend as a surprise bounce in French business activity boosted investor sentiment. In early trade, London’s FTSE 100 was up 1.6 percent while Germany’s DAX was up 1.12 percent and France’s CAC 40 was trading up 1.16 percent.

Shares of Volkswagen AG showed signs of a mild recovery Wednesday, trading up 1.21 percent after the stock plummeted about 40 percent in the last two trading sessions after the German automaker was found cheating on U.S. emissions tests. The company announced Tuesday that it would set aside over $7 billion to deal with the scandal and CEO Martin Winterkorn was summoned by the board Wednesday to explain how the tests were falsified.

Meanwhile, U.S. stock futures painted a more positive picture, with futures on the S&P 500 up 0.34 percent. Futures for the Dow Jones Industrial Average were up 0.38 percent while Nasdaq 100 index futures were up 0.42 percent.

On Tuesday, the Dow Jones fell 1.1 percent while the S&P 500 dropped 1.2 percent and the Nasdaq was down 1.5 percent.

“[This was] good old-fashioned overnight panic and then suddenly people don’t care anymore and are much calmer,” said Chris Beauchamp, senior market analyst at IG, according to MarketWatch.

“It really repeats the pattern we’ve seen over the past months. Everything seem to be locked in a delicate balance of buyers and sellers, even more than usual. And every dip has been furiously bought, but every rally has been sold. You really get the sense that both sides are locked in a stalemate,” Beauchamp added.