Global stocks rebounded Monday, easing investor concerns after a turbulent week when a plunge in oil prices, the prospect of an economic slowdown and global trade tensions rattled markets.
The Stoxx Europe 600 recently was up 1.2%. In Asia, Japan’s Nikkei Stock Average was up 0.8%, while South Korea’s Kospi benchmark gained 1.2% and Hong Kong’s Hang Seng was up 1.7%.
In the U.S., futures pointed to a 1.2% opening gain for the S&P 500 and a 1.1% increase on the Dow Jones Industrial Average.
Equity markets from the U.S. to Asia have been battered in recent weeks, as concerns around a glut of oil fed unease, while investors watched closely for signs of an end to expansion in the U.S. economy.
“Once you see any slowdown in the data people are going to pile on that trend and start focusing on the turn in the economic cycle and a turn in the dollar as well,” says Peter Kisler, portfolio manager at North Asset Management.
Brent crude, the global oil-price benchmark, rebounded 1.8% to $59.84 (U.S.) a barrel Monday, making up some of last week’s slump, the largest one-week net decline in four years. Brent has dropped for seven weeks straight, losing 6% in the last session alone on concerns over global oversupply.
The WSJ Dollar Index, which tracks the dollar against a basket of 16 currencies, was down 0.2% on Monday.
Italy’s benchmark FTSE MIB index rallied 2.9% after Deputy Prime Minister Matteo Salvini suggested Rome’s budget targets could be flexible, sparking hopes that the euroskeptic government might still avoid a full-on collision with European Union authorities.
“I think nobody is attached to that,” Mr. Salvini told Italian news service Adnkronos on Sunday when asked whether plans to run a deficit of 2.4% of GDP were concrete. “We do not want to quarrel with anyone.”
The yield on 10-year Italian government bonds dropped to 3.244% on Monday, from 3.409% at its previous close. Yields move inversely to prices.
Investors were also watching for developments related to Brexit, after the EU Sunday approved a treaty that outlined divorce terms with the U.K., which many analysts saw as a mere formality. The next hurdle for British Prime Minister Theresa May is pushing the deal through a vote in a divided Parliament.
The British pound Monday edged up 0.2% against the U.S. dollar.
“Currently it looks as though MPs will reject the deal, but the dynamics could change quickly over the coming weeks as business comes out in support of the deal (to avoid a cliff edge) and the EU says (at least for no) that it will not renegotiate,” UniCredit analysts said in a note to clients.
Markets are also eyeing U.S.-China trade relations ahead of a Group of 20 summit in Argentina at the end of the week.
Like many others, Yerlan Syzdyko, head of emerging markets at Amundi, is expecting the trade conflict to calm in the short-term at least, with signs that fresh concessions will be made before President Trump and China’s President Xi Jinping sit down together later this week.
“Clearly the Chinese took a view—and maybe an erroneous view—that the market will react to [trade tensions] not only in China but also in the U.S.,” Mr. Syzdyko said. “And that was a wrong calculation because markets obviously ignored it on the U.S. side.”
Any deterioration in relations could weigh on markets further by threatening global growth, analysts say. The U.S. already plans to increase tariffs on $200 billion of Chinese imports to 25% in January, unless some agreement is made.
Worries about a slowdown in the global economy have prompted the U.S. Federal Reserve to take a more dovish tone of late, analysts at Citi said in a recent note to clients, who still expect three further rate increases between now and June.
The 10-year U.S. Treasury yield drifted up to 3.063%, compared with 3.045% on Friday. Yields move inversely to prices.
Bitcoin dropped 3% to $3,964.83 on Monday, according to CoinDesk, and is now down some 80% from highs of nearly $20,000 last year.
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