Reuters logo
GLOBAL MARKETS-Europe rides rebound as global sell-off abates
October 17, 2014 / 8:59 AM / in 3 years

GLOBAL MARKETS-Europe rides rebound as global sell-off abates

* European shares, euro zone periphery bonds rebound
    * Wall Street set for strong gains as mood improves
    * Markets digesting GE results, Yellen awaited
    * Volatility index eases from 2 1/2-year high
    * Oil climbs to $87 a barrel, gold drops back

    By Marc Jones
    LONDON, Oct 17 (Reuters) - European stocks jumped the most
in seven months and oil and southern euro zone bonds rebounded
sharply on Friday as investors poured back into beaten-down
markets as the week's volatility frenzy continued.
    Nerviness remained, but some reassuring words from U.S. and
European policymakers, better U.S. data, and a sense there could
be bargains to be had after another big week of equity and
commodity falls, drew buyers in off the sidelines.
    U.S. stock futures pointed to a 1-1.4 percent jump for Wall
Street later, as some forecast-topping premarket results from
global giant General Electric and an 87 percent jump in Morgan
Stanley's profits cemented the positive mood.  
    Bourses in London, Frankfurt and Paris
 were up 1.1 to 2 percent while stocks in Athens 
soared 7 percent as Greek debt markets steadied
after their worst week since the height of the euro crisis.
    In the currency market the safe-haven yen was off
recent highs after another choppy session, while oil 
kicked clear of the four-year lows it has hit this week amid
global growth worries and fears of oil market
    "It's been a very lively week, but it seems a bit calmer
today," said Alvin Tan, a FX market strategist at Societe
Generale in London.
    "People are hoping to hear some soothing words from
policymakers and it wouldn't be surprising to hear some dovish
comments.. and that kind of rhetoric would certainly help settle
    Central bankers from Europe had already been out in force
and markets were waiting on a speech due from the head of the
Federal Reserve, Janet Yellen, later in the day.
    One of the European Central Bank's longest-serving members,
Ewald Nowotny, said earlier it had more ammunition at its
disposal while the Bank of England's chief
economist said UK rates may need to remain low for longer than
previously thought. 
    "Put in rather plainer English, I am gloomier," the BoE's
Andrew Haldane added.
    The possible return to recession in the euro zone, a
floundering economy in Japan, a slowing China and the Ebola
crisis have rattled investors already nervous about the end of
years of U.S. stimulus.
    It has triggered the highest volatility and trading volumes
since 2012's peak in the euro crisis, and with bond yields
already measly in the U.S. and other traditional safe ports like
Germany and Japan, investors are struggling for options.
    U.S. and Europe stocks and oil markets are
on track for a fourth straight week of falls and for
growth-dependent emerging markets it is six. MSCI's
all world index which covers 45 countries, at
its lowest level since January. 
    But for the day at least Europe was riding the rebound,
Greek bond yields were down a full percentage
point in the debt markets as the euro zone's other debt strained
Mediterranean member also saw the pressure ease. 
    Asia markets in contrast had stayed in the doldrums
overnight. Tokyo's Nikkei led the losses, falling 1.3
percent on the day and 5.0 percent on the week, its biggest
weekly fall in six months.
    Mainland Chinese shares also posted their biggest
fall in four months on worries over the economy and as investors
brace for a landmark trading link between Hong Kong and Shanghai
    U.S. markets though were already digesting a flurry of
upbeat company earnings from global giants General Electric,
Honeywell and Morgan Stanley as they waited to here
from the Federal Reserve's Yellen. 
    Topping the list of topics markets are hoping she addresses
is the current market volatility. The so-called fear
gauge eased slightly on Friday but has spiked to 2-1/2 year
highs this week as markets have lurched lower.
    Comments from James Bullard, the head of the St. Louis
Federal Reserve Bank, had helped settle markets on Thursday as
he said the Fed may want to keep up its bond-buying stimulus for
now, given a drop in inflation expectations. 
    There was also a strong round of data. New unemployment
benefit claims fell to a 14-year low and September
industrial output rebounded sharply, suggesting the
U.S. economy remains strong for now. 
    As the start of U.S. trading approached, the dollar 
had steadied along with most major currencies after the
sharp sell-off that has convulsed global markets this week. U.S.
Treasury yields were up at 2.19 percent. 
    Sterling was the standout among the major pairs,
falling about a third of a percent following the cautious
comments from the BoE's chief economist. 
    Commodities markets were also calmer, having been badly
buffeted in many cases for a fourth week running. 
    Brent crude was up over a dollar near $87 a barrel
but will end another week deep in the red, while safe-haven
favourite gold slipped back to 1,237.26 an ounce.
    "I expect market volatility to gradually to come down," said
Makoto Noji, senior strategist at SMBC Nikko Securities.
"Loss-cutting trades will come to an end soon after a hectic
week and markets will be looking to what kind of policy options
major countries can adopt now."

 (Reporting by Marc Jones; Editing by Hugh Lawson)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below