In the US, weak GDP data raised expectations the US central bank would go slow on future interest rate hikes.
US GDP rose 0.7% in the fourth quarter, below the 0.8% surveys had expected, as a strong dollar and tepid global demand hurt US exports.
Intervention by central banks has become key to supporting turbulent markets, roiling under slowing global economic growth.
In Japan, the central bank cut a key interest rate below zero yesterday to spur its flagging economy.
While the US Federal Reserve has not ruled out another rate hike in March, the turmoil could force it to wait until June.
Investors are still reeling from one of the worst starts to a year as oil prices remain under pressure and fears of a China-led global slowdown grow.
“We’re likely to settle in at these levels for a short time, at least until more news comes out probably in a month or so,” said Terry Sandven, chief equity strategist at US Bank Wealth Management.
“Near term, I think it’s oil, earnings and technicals that are likely to drive the market,” he said.
Experts here were less optimistic that the under-lying problems of the Chinese economy, that have exposed the weaknesses of the world economy, would be on the mend any time soon.
“The clouds in China are having an impact on the global economy and will impact further,” said Professor Louis Brennan at TCD.
An expert on multinationals and China, he said the steps that China had taken to liberalise its stock markets and trading its currency had had detrimental effects on the stability of the world economy.
The warning signs are that economies from China, Canada, Russia and Brazil were not doing well, Prof Brennan said.
Having benefited from the weakened euro, Ireland was insulated for the time being.
Ireland however, will need high growth rates over a number of years to help reduce the country’s elevated levels of government and private household debt.
Finance professor Brian Lucey at the TCD School of Business said no country could sustain the rapid growth rates that China had recorded indefinitely.
“Everything must slow down,” he said.
China had benefited for over a decade from the huge shift in population from the countryside into the cities which had boosted productivity and ramped up economic growth figures, said Prof Lucey.
Seamus Coffey at UCC said in the short term the slowdown in China and the stock- market turmoil should not affect the economy.
Yesterday’s gains for stocks took the sting out of the worst January for stocks since 2009 in a selloff that erased €6.4 trillion from the market value worldwide.
The turbulence prompted the Federal Reserve to say on Wednesday that it was closely monitoring the global environment. And the ECB had signalled it could boost stimulus for financial markets, known as quantitative easing, as soon as March.
Talk of oil producers taking action to reduce a glut has helped pare crude’s drop in 2016 after it plunged to a 12-year low.