(Bloomberg) — Stocks in Europe rose Monday along with U.S. futures as traders took advantage of last week’s selloff while keeping a wary eye on risks from the delta virus strain and China’s regulatory crackdown. Bonds declined.
The Stoxx Europe 600 index climbed for a second day, though the gauge pared gains after purchasing managers surveys from the region’s biggest economies underscored risks to the economic recovery. Retailers headed the advance after a report of a takeover bid for J. Sainsbury Plc sent the grocer’s shares up more than 11%.
Treasury yields rose along with those on core European bonds, and the dollar slipped for the first day in six on easing demand for havens. Investors are also looking ahead to the Jackson Hole symposium Thursday, which may offer insights into how and when the Federal Reserve plans to taper bond purchases.
Some of the recent weakness in commodities abated, with oil pushing past $63 a barrel. Commodity-linked currencies like the Australian dollar strengthened. Bitcoin retook $50,000 for the first time since mid-May.
Dip-buying suggests investors have faith in central banks to maintain stimulus. Euro-area purchasing managers’ indexes on Monday signaled a strong recovery, though risks remain high as factories struggle with supply bottlenecks and the virus resurgence casts a pall on the outlook. Traders will scrutinize U.S. manufacturing, GDP and jobs data this week as they wait for the Fed’s Jackson Hole symposium, which may provide further signals on the outlook for monetary policy.
“We do not expect much of ‘breaking news’ to come from the Jackson Hole symposium, but rather some form of relief that the policy course remains lower for longer,” said Daniel Egger, the CIO at St. Gotthard Fund Management. “There appears to be growing consensus that the Fed will tread very cautiously in this regard.”
Meanwhile. MSCI Inc.’s gauge of Asia-Pacific shares posted one of its biggest daily rallies this month as Chinese technology stocks rebounded from a prolonged selloff. Contracts on the S&P 500 and Nasdaq 100 advanced.
Dallas Fed President Robert Kaplan said he’s open to adjusting his view that the Fed should start tapering its asset-purchase program sooner rather than later if the delta strain persists and hurts economic progress. Treasury Secretary Janet Yellen endorsed Jerome Powell for a second term as Fed chair, a move that could reduce uncertainty about the path for monetary policy.
On the the virus front, China once again squelched local Covid-19 cases down to zero. Australia and New Zealand are reviewing their strategies of eliminating infections. Australian Prime Minister Scott Morrison said it’s highly unlikely his country will ever return to zero cases.
Here are some events to watch this week:
U.S. Markit manufacturing PMI and existing home sales MondayBank of Korea policy decision; briefing by Governor Lee Ju-yeol ThursdayFed officials attend the Jackson Hole Economic Policy Symposium from Thursday through SaturdayU.S. GDP, initial jobless claims ThursdayJuly U.S. personal income and spending data Friday. Investors will scrutinize the personal consumption expenditures price index, an inflation measure closely watched by the Fed.
For more market analysis read our MLIV blog.
Some of the main moves in markets:
Stocks
The Stoxx Europe 600 rose 0.2% as of 9:19 a.m. London timeFutures on the S&P 500 rose 0.3%Futures on the Nasdaq 100 rose 0.3%Futures on the Dow Jones Industrial Average rose 0.2%The MSCI Asia Pacific Index rose 1.4%The MSCI Emerging Markets Index rose 1.1%
Currencies
The Bloomberg Dollar Spot Index fell 0.2%The euro rose 0.2% to $1.1727The Japanese yen fell 0.2% to 109.96 per dollarThe offshore yuan rose 0.1% to 6.4915 per dollarThe British pound rose 0.3% to $1.3658
Bonds
The yield on 10-year Treasuries advanced two basis points to 1.27%Germany’s 10-year yield advanced three basis points to -0.47%Britain’s 10-year yield advanced three basis points to 0.55%
Commodities
Brent crude rose 2.4% to $66.76 a barrelSpot gold rose 0.2% to $1,785.19 an ounce
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