Sydney: Stocks staged a robust recovery on Friday as strong trade data from China buoyed markets at the end of a tumultuous week. The dollar steadied as Treasury yields ticked higher.
European stocks, US futures rise 1% as Treasury yields climb
The Stoxx Europe 600 index gained for the first time in three days, though still headed for its worst week since March, while U.S. equity-index futures also advanced. The MSCI Asia Pacific Index climbed from the lowest level since May 2017, with shares in Hong Kong and South Korea leading the way. Benchmarks in Tokyo struggled for traction and shares in Shanghai staged a modest rally. The yuan retreated following a Bloomberg report that U.S. Treasury staff concluded China isn’t manipulating its exchange rate.
China’s gravity-defying export growth eased concerns about the trade war which contributed to the worst equity sell-off since February. While Federal Reserve Chairman Jerome Powell was upbeat about the state of the U.S. economy last week, President Donald Trump blamed policy makers for the retreat. Fundamentals may come back into play Friday as investors turn their attention to third-quarter earnings, with JPMorgan Chase & Co., Citigroup Inc. and Wells Fargo & Co. kicking off the season for U.S. banks on Friday.
“Folks are re-rating whether the Fed is going to tighten too much — I think that’s the fear,” said Michael Arone, chief investment strategist at State Street Global Advisors in Boston. Even so, “nothing’s really changed in terms of the Fed’s path, and I think the economy continues to be quite strong,” Arone said, concluding that investors “have had a violent overreaction.”
Singapore’s dollar advanced after the central bank tightened its policy stance as anticipated on Friday. Traders will be watching the yuan after the report that U.S. Treasury staff advised Secretary Steven Mnuchin that China isn’t manipulating the exchange rate, as the Trump administration prepares to issue a closely watched report on foreign currencies.
Elsewhere, West Texas oil recovered, while still heading for the biggest weekly drop since July.
These are the main moves in markets:
The Stoxx Europe 600 Index jumped 0.8 percent to 362.62 as of 8:04 a.m. London time, the biggest climb in 11 weeks. Futures on the S&P 500 Index surged 1.3 percent, the largest jump in six months. The MSCI All-Country World Index jumped 0.5 percent, the first advance in more than a week and the biggest climb in more than three weeks. The U.K.’s FTSE 100 Index gained 0.3 percent. Germany’s DAX Index surged 1.2 percent, the biggest jump in 11 weeks. The MSCI Emerging Market Index surged 2.1 percent, the first advance in more than a week and the largest jump in 15 weeks.
The Bloomberg Dollar Spot Index dipped 0.1 percent to the lowest in two weeks. The euro climbed 0.1 percent to $1.16, the strongest in two weeks. The British pound gained 0.2 percent to the strongest in more than three weeks. The Japanese yen fell 0.2 percent to 112.41 per dollar, the first retreat in more than a week.
The yield on 10-year Treasuries rose three basis points to 3.18 percent, the biggest advance in a week. Germany’s 10-year yield increased two basis points to 0.54 percent. Britain’s 10-year yield gained two basis points to 1.694 percent. Japan’s 10-year yield climbed less than one basis point to 0.15 percent.
West Texas Intermediate crude increased 1.2 percent to $71.81 a barrel, the largest climb in more than a week. Gold dipped 0.5 percent to $1,218.44 an ounce. Copper climbed 0.4 percent to $2.82 a pound, the highest in more than a week.