Upbeat economic data from China and India have helped to support stock markets and the price of copper, and calmed fears of a global "double dip" recession.
China's purchasing manager's index – like its counterparts in the West regarded as a reliable leading indicator – registered its first gain in four months in August, ticking up from 51.2 to 51.7. A similar survey of business confidence conducted by HSBC revealed a similar picture.
This is the 18th successive month that the Chinese PMI has stood above the benchmark reading of 50 that indicates expansion rather than recession in the coming months.
The refocusing of the Chinese economy towards domestic consumption was also confirmed in the latest results from the China Automotive Technology and Research Centre, which said that passenger car sales surged in August by 59.3 per cent on the year, to 977,300, halting the decline in car sales seen since March.
The latest GDP figures for the second quarter in Australia added to the good news, as did robust readings from India on business sentiment and exports. Australia's economy grew by 1.2 per cent from April to June, its fastest quarterly rate for three years, as consumer spending and a mining boom drove the economy forward. Meanwhile, the Indian economy is growing at 8.8 per cent a year.
Only reports that the Beijing authorities were planning a renewed effort to rein in the housing bubble weighed down on the wave of optimism.
Forecast to overtake Japan as the world's second-largest economy this year, China is increasingly becoming an engine of regional and world growth as its economic stimulus measures have stimulated domestic demand and boosted growth in surrounding countries.
China's demand for industrial raw materials is having an especially powerful effect on copper – its price on the London Metals Exchange rose a new four-month high of just under $7,600 a ton.
Still, longer-term factors such as the property bubble in China and double-digit inflation in India could yet lead to a sharp slowdown in these powerhouses.