European shares rose for the first day in five as bonds recovered and a selloff sparked by rate fears abated.
(Bloomberg) — European shares rose for the first day in five as bonds recovered and a selloff sparked by rate fears abated.
The Stoxx 600 ticked higher, led by technology and energy companies. US equity futures added about 0.5% and a measure of global equities fell below its 200-day moving average, suggesting stocks may be entering oversold territory after teetering on the edge of their longest losing streak in more than a decade.
Yields on Treasuries slipped from decade highs along with those on German government benchmarks. A gauge of the dollar traded near a nine-month high on speculation the greenback’s real yield advantage will widen over its peers as the Federal Reserve keeps policy restrictive.
Much rests on the bond market, which is guiding the direction for stocks and currencies, and ultimately the economy, according to Derek Halpenny, head of global markets research at MUFG Bank Ltd.
“If yields continue to move higher, at some point relatively soon we will see even larger equity market declines and a hit to the main engine of the US economy – the consumer,” Halpenny wrote in a note. “Falls in equity markets would impact expectations further and begin to impact consumers’ appetite to spend.”
Oil resumed its climb, moving back above $91 a barrel. US consumer confidence has taken a knock from higher costs at the filling station and the spreading impact of aggressive rate hikes.
A gauge of consumer sentiment dropped to 103 from a revised 108.7 in August, missing the median estimate of 105.5 in a Bloomberg survey of economists.
Meanwhile, Senate Democratic and Republican leaders agreed Tuesday on a plan to keep the government open through mid-November and provide $6 billion in assistance to Ukraine. The plan to avert a shutdown on Oct. 1 still needs to overcome gridlock in the House.
Key events this week:
- US durable goods, Wednesday
- Eurozone economic confidence, consumer confidence, Thursday
- US initial jobless claims, GDP, Thursday
- Fed Chair Jerome Powell town hall meeting with educators while Richmond Fed President Tom Barkin, Chicago Fed President Austan Goolsbee make speeches, Thursday
- Eurozone CPI, Friday
- Japan unemployment, industrial production, retail sales, Tokyo CPI, Friday
- US consumer spending, wholesale inventories, University of Michigan consumer sentiment, Friday
- ECB President Christine Lagarde speaks, Friday
- New York Fed President John Williams speaks, Friday
Some of the main moves in markets:
- The Stoxx Europe 600 rose 0.4% as of 9:24 a.m. London time
- S&P 500 futures rose 0.5%
- Nasdaq 100 futures rose 0.5%
- Futures on the Dow Jones Industrial Average rose 0.4%
- The MSCI Asia Pacific Index rose 0.1%
- The MSCI Emerging Markets Index rose 0.2%
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0568
- The Japanese yen was little changed at 149.02 per dollar
- The offshore yuan was little changed at 7.3128 per dollar
- The British pound was little changed at $1.2153
- Bitcoin rose 0.3% to $26,221.59
- Ether rose 0.2% to $1,590.05
- The yield on 10-year Treasuries declined three basis points to 4.51%
- Germany’s 10-year yield declined one basis point to 2.79%
- Britain’s 10-year yield declined three basis points to 4.30%
- Brent crude rose 1% to $94.86 a barrel
- Spot gold fell 0.3% to $1,895.64 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Matthew Burgess and Richard Henderson.
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