Global Stock Markets
World stocks clawed their way back from two-month lows on Wednesday,
though momentum was weak and U.S. futures suggested Wall Street could
lapse back into losses after rebounding from the biggest selloff in six
years.
European shares opened firmer after plumbing six-month depths on Tuesday, the tail-end of a selloff induced by a volatility spike that took Wall Street’s fear gauge, the VIX index, as high as 50, more than three times its closing level last Thursday.
That rout had wiped $4 trillion off world equities and sent investors scurrying for the safety of German and U.S. bonds, briefly reversing the steady rise in global yields.
MSCI’s all-country index, however, was up 0.25 percent after four days in the red, boosted by gains in Europe, Japan and emerging markets.
As calm returned, bond buying by panicky investors also abated and yields on “safe” German, Japanese and U.S. debt edged up, resuming the trend of recent weeks as markets price further U.S. rate rises and the withdrawal of stimulus in Europe.
Yields on Germany’s 10-year government bond, the euro zone benchmark, were around 0.69 percent, having plunged to 0.66 percent on Tuesday..
Markets are also on edge over U.S. lawmakers’ wrangling to extend the so-called debt ceiling - funding for the U.S. government runs out on Feb. 8 unless a stopgap bill manages to pass the Senate later on Wednesday.
U.S. 10-year yields rose back as high as 2.80 percent after approaching two-week lows around 2.65 percent on Tuesday.
European shares were positioned for a strong session after seven days of losses, with a pan-European index up 0.7 percent thanks also to a series of robust company earnings reports.
German shares rose 0.6 percent, adding gains after news of a government coalition deal, with Social
Democrats likely taking the key finance portfolio. Southern European bonds, generally seen as riskier assets, also rallied, with yields on Italian, Spanish and Portuguese debt down 5-8 basis points.
MSCI’s emerging equity index was modestly firmer, and unlike most other indexes it has clung to slender year-to-date gains.
On currency markets, which too stayed relatively calm through the rout, the dollar rose slightly against a basket of currencies but fell half a percent to the yen.
Sterling meanwhile was down for the fourth straight day against the dollar, hurt by recent surveys confirming the economy’s fragile state and fresh tensions over Britain’s divorce negotiations with the European Union.
Investors are awaiting Thursday’s Bank of England meeting which should provide an update on authorities’ views on the economy and timing of the next interest rate rise.
Earlier in the day, China’s yuan rose 0.4 percent to the highest since August 2015 when authorities conducted a one-off devaluation.
European shares opened firmer after plumbing six-month depths on Tuesday, the tail-end of a selloff induced by a volatility spike that took Wall Street’s fear gauge, the VIX index, as high as 50, more than three times its closing level last Thursday.
That rout had wiped $4 trillion off world equities and sent investors scurrying for the safety of German and U.S. bonds, briefly reversing the steady rise in global yields.
MSCI’s all-country index, however, was up 0.25 percent after four days in the red, boosted by gains in Europe, Japan and emerging markets.
As calm returned, bond buying by panicky investors also abated and yields on “safe” German, Japanese and U.S. debt edged up, resuming the trend of recent weeks as markets price further U.S. rate rises and the withdrawal of stimulus in Europe.
Yields on Germany’s 10-year government bond, the euro zone benchmark, were around 0.69 percent, having plunged to 0.66 percent on Tuesday..
Markets are also on edge over U.S. lawmakers’ wrangling to extend the so-called debt ceiling - funding for the U.S. government runs out on Feb. 8 unless a stopgap bill manages to pass the Senate later on Wednesday.
U.S. 10-year yields rose back as high as 2.80 percent after approaching two-week lows around 2.65 percent on Tuesday.
European shares were positioned for a strong session after seven days of losses, with a pan-European index up 0.7 percent thanks also to a series of robust company earnings reports.
German shares rose 0.6 percent, adding gains after news of a government coalition deal, with Social
Democrats likely taking the key finance portfolio. Southern European bonds, generally seen as riskier assets, also rallied, with yields on Italian, Spanish and Portuguese debt down 5-8 basis points.
MSCI’s emerging equity index was modestly firmer, and unlike most other indexes it has clung to slender year-to-date gains.
On currency markets, which too stayed relatively calm through the rout, the dollar rose slightly against a basket of currencies but fell half a percent to the yen.
Sterling meanwhile was down for the fourth straight day against the dollar, hurt by recent surveys confirming the economy’s fragile state and fresh tensions over Britain’s divorce negotiations with the European Union.
Investors are awaiting Thursday’s Bank of England meeting which should provide an update on authorities’ views on the economy and timing of the next interest rate rise.
Earlier in the day, China’s yuan rose 0.4 percent to the highest since August 2015 when authorities conducted a one-off devaluation.
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