European stocks rose with government bonds, signaling a potential recovery at the end of a tumultuous week in markets.
(Bloomberg) — European stocks rose with government bonds, signaling a potential recovery at the end of a tumultuous week in markets.
European shares added about 1%, paring the longest run of quarterly losses since 2009. US equity futures also gained following another bruising session on Wall Street that took the S&P 500 down 2% to the lowest in almost two years and sent the tech-heavy Nasdaq 100 tumbling almost 4%. Government debt markets rallied.
Fears of global recession are mounting as the threat of higher rates saps growth. The case of the UK shows how faultlines between government and central bank policy on tackling inflation can erupt into a crisis.
The dollar weakened while the pound rose as investors weighed risks emanating from the debt crisis gripping the UK.
“Today, everything is just oversold so you are seeing a rebound,” said Esty Dwek, chief investment officer at Flowbank SA.
The UK currency has staged an almost full recovery since the government announced sweeping UK tax cuts a week ago, surging 7% from its all-time low of $1.0350 set early Monday.
“We are closer to bottoms and sentiment is so negative the downside is becoming more limited,” Dwek said. “At some point, risk assets will move higher again.”
Global equity funds garnered inflows of $7.6 billion in the week to Sept. 28, according to data compiled by EPFR Global. Bonds had $13.7 billion of outflows in the week, while $8.9 billion flowed into US stocks, the data showed.
Even so, the mood remains unsettled, with traders gauging the next pressure points that could undo gains won by the Bank of England’s billions in bond-market buying in the past two days.
Read more: The Market Pain Levels That May Spark the Next UK Policy Action
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Key events this week:
- Euro zone CPI, unemployment, Friday
- US consumer income , University of Michigan consumer sentiment, Friday
- Fed’s Lael Brainard and John Williams speak, Friday
Some of the main moves in markets:
Stocks
- The Stoxx Europe 600 rose 0.9% as of 10:23 a.m. London time
- Futures on the S&P 500 rose 0.7%
- Futures on the Nasdaq 100 rose 0.6%
- Futures on the Dow Jones Industrial Average rose 0.6%
- The MSCI Asia Pacific Index fell 0.5%
- The MSCI Emerging Markets Index rose 0.2%
Currencies
- The Bloomberg Dollar Spot Index fell 0.2%
- The euro was little changed at $0.9819
- The Japanese yen rose 0.1% to 144.25 per dollar
- The offshore yuan fell 0.1% to 7.1057 per dollar
- The British pound rose 0.5% to $1.1169
Cryptocurrencies
- Bitcoin rose 0.2% to $19,542.85
- Ether rose 0.3% to $1,342.65
Bonds
- The yield on 10-year Treasuries declined eight basis points to 3.71%
- Germany’s 10-year yield declined seven basis points to 2.11%
- Britain’s 10-year yield declined 11 basis points to 4.03%
Commodities
- Brent crude rose 1.2% to $89.54 a barrel
- Spot gold rose 0.6% to $1,671.07 an ounce
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