Asian equity markets recovered some of the losses sustained in the global rout after U.S. shares rallied amid a welter of calls to “buy the dip.” Treasuries steadied after a rebound in yields Tuesday.
Japan’s Topix index was poised for its biggest jump since November 2016, while stocks also rose in Hong Kong and China. Volatility on the Nikkei 225 Stock Average fell almost 20 percent after soaring for the previous two days. A topsy-turvy session for the S&P 500 Index ended with technology, materials and consumer shares leading a 1.7 percent advance. The Cboe Volatility Index went through wild gyrations one day after more than doubling, though ended the session down almost 20 percent.
“The pullback may be considered a healthy correction,” said Candice Bangsund, a fund manager in Montreal at Fiera Capital Corp., which oversees more than $128 billion. “The favorable conditions that have underpinned the stock market rally over the last year remain largely intact at this time — the global expansion continues and corporate earnings remain in acceleration mode.”
The sharp sell-off in stocks around the world that started last week and accelerated this week can be explained by a multitude of factors from concerns over the path of U.S. monetary policy to a rapid unwinding of trades predicated on continued low volatility in markets. Traders are now watching whether this rally can be sustained after the slump left markets from Europe to Japan in technically oversold territory.
Goldman Sachs Group Inc.’s chief strategist was among those saying it’s time to buy U.S. stocks.
Meantime, oil rose after three days of declines as an industry report was said to show an unexpected decline in U.S. crude stockpiles. Metals advanced. Bitcoin traded around $7,700 after at one point sinking below $6,000 for the first time since October.
Here are some key events scheduled for this week:
- India’s central bank will probably hold and maintain a neutral stance Wednesday. Governor Urjit Patel is in a bind, needing to both reduce inflation and keep rates low enough to ensure Prime Minister Narendra Modi can bridge a wider fiscal deficit. The Reserve Bank of India is probably overestimating CPI and economic growth, allowing policy makers to tilt back toward easing by midyear, Bloomberg Economics said.
- Monetary policy decisions are also due this week in Russia, Brazil, Poland, Romania, the U.K., New Zealand, Serbia, Peru and the Philippines.
- Earnings season continues with reports from SoftBank, Sanofi, Philip Morris, Tesla, Rio Tinto, L’Oreal and Twitter.
- New York Fed President William Dudley and Dallas Fed President Robert Kaplan are among policy officials due to speak.
Terminal users can read more in our markets blog.
These are the main moves in markets:
- Japan’s Topix index advanced 3.4 percent as of 10:41 a.m. in Tokyo and the Nikkei 225 Stock Average jumped 3.3 percent.
- Australia’s S&P/ASX 200 Index rose 1.2 percent.
- Hong Kong’s Hang Seng Index surged 2.5 percent and the Shanghai Composite Index rose 1.2 percent.
- Futures on the S&P 500 fell 0.1 percent. The underlying measure gained 1.7 percent Tuesday.
- The MSCI Asia Pacific Index climbed 2.4 percent, set for its steepest gain since November 2016.
- The Bloomberg Dollar Spot Index fell 0.1 percent.
- The yen was little changed at 109.40 per dollar.
- The euro traded steady at $1.2387.
- The pound was little changed at $1.3963.
- The Aussie dollar was steady around 79 U.S. cents.
- The yield on 10-year Treasuries held at 2.80 percent after climbing nine basis points Tuesday.
- Australia’s 10-year yield rose more than five basis points to 2.87 percent.
- West Texas Intermediate crude gained 0.9 percent to $63.93 a barrel.
- Gold rose 0.4 percent to $1,329.35 an ounce.