European stocks rebounded from a one-month low as higher energy prices buoyed oil producers. Natural gas prices soared, while bonds were broadly weaker.
(Bloomberg) — European stocks rebounded from a one-month low as higher energy prices buoyed oil producers. Natural gas prices soared, while bonds were broadly weaker.
The trading session in Europe was relatively subdued, with volumes on the Stoxx 600 Index about a third lower than usual. TotalEnergies SE, Shell Plc and BP Plc were among the biggest contributors to the equity benchmark’s gains. US futures contracts rose, signaling a bounce for the underlying gauges from their worst week since early August.
Benchmark Dutch front-month gas soared as much as 18% as traders priced in the possibility of supply disruptions from a potential strike in Australia. Global benchmark Brent traded above $85 a barrel, and is up more than 2% since last Wednesday’s close.
Yields climbed across tenors, bringing the 10-year’s back on its path toward the highest level since November 2007 and the 30-year’s near 2011 highs, as a selloff in the Treasury market this month wiped out what was left of year-to-date gains.
The gains in stocks come after a run of sharp losses with the MSCI World Index coming off the back of a three-week losing streak. Investors seeking clues on the global interest-rate outlook will turn their attention later this week to the annual Jackson Hole, Wyoming, gathering of central bankers.
David Henry, investment manager at Quilter Cheviot, said markets were normalizing after profit-taking drove the pullback last week. “There’s a bifurcation in the market at the moment, where the expensive stuff is eye-wateringly expensive and the cheap stocks are incredibly cheap,” Henry said. “Investors have been looking for quality stocks in advance of a recession and are prepared to pay up for businesses that are growing and fundamentals are good.”
Some attention has already turned to Friday, when Federal Reserve Chairman Jerome Powell is expected to strike “a more balanced tone in Wyoming, hinting at the tightening cycle’s end while underscoring the need to hold rates higher for longer,” according to Anna Wong at Bloomberg Economics.
On the earnings front, the week’s key event is Wednesday’s report from Nvidia Corp., the chipmaker whose blowout revenue forecast helped ignite this year’s rally in artificial intelligence-linked stocks.
In contrast with Monday’s gains in European stocks and US futures, the mood was darker in Asia. A gauge of the region’s stocks dropped for the seventh day in the longest losing streak since June 2022, while shares in mainland China fell 1.4%.
Confusion over China’s approach to stemming the nation’s property slump strained sentiment. Chinese lenders cut the one-year loan prime rate by 10 basis points and kept the five-year prime loan rates unchanged even after policymakers called for more lending. Traders had expected a 15-basis-point cut on both rates.
Elsewhere, a gauge of dollar strength traded little changed. The offshore yuan fell against the greenback. The People’s Bank of China had earlier set the daily reference rate for the yuan at a level stronger than the average estimate in a Bloomberg survey.
Oil rose for a third day as signs the physical market is tightening and a stall in the dollar’s rally offset growing demand risks in China and the US.
Key events this week:
- US existing home sales, Tuesday
- Chicago Fed’s Austan Goolsbee speaks, Tuesday
- Eurozone S&P Global Services & Manufacturing PMI, consumer confidence, Wednesday
- UK S&P Global / CIPS UK Manufacturing PMI, Wednesday
- US new home sales, S&P Global Manufacturing PM, Wednesday
- US initial jobless claims, durable goods, Thursday
- Kansas City Fed’s annual economic policy symposium in Jackson Hole begins, Thursday
- Japan Tokyo CPI, Friday
- US University of Michigan consumer sentiment, Friday
- Fed Chair Jerome Powell, ECB President Christine Lagarde to address Jackson Hole conference, Friday
Some of the main moves in markets:
Stocks
- The Stoxx Europe 600 rose 0.7% as of 9:39 a.m. London time
- S&P 500 futures rose 0.3%
- Nasdaq 100 futures rose 0.5%
- Futures on the Dow Jones Industrial Average rose 0.2%
- The MSCI Asia Pacific Index fell 0.5%
- The MSCI Emerging Markets Index fell 0.5%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro rose 0.1% to $1.0884
- The Japanese yen fell 0.1% to 145.58 per dollar
- The offshore yuan fell 0.2% to 7.3237 per dollar
- The British pound fell 0.2% to $1.2714
Cryptocurrencies
- Bitcoin fell 0.7% to $26,040.96
- Ether fell 1% to $1,672.93
Bonds
- The yield on 10-year Treasuries advanced three basis points to 4.28%
- Germany’s 10-year yield advanced two basis points to 2.64%
- Britain’s 10-year yield was little changed at 4.67%
Commodities
- Brent crude rose 0.8% to $85.49 a barrel
- Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Brett Miller and Tassia Sipahutar.
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