Upbeat European data helped drag world shares and oil off one-month lows on Monday, as uncertainty over United States monetary stimulus and global growth extended a volatile spell on markets, Reuters reports.
MSCI’s world share index, which tracks stocks in 45 countries, staged a strong fightback as the US open neared, after sharp early falls in Europe and in Japan had pushed it to its lowest in a month.
Oil and commodity markets saw big moves too, with crude swinging almost two dollars and nickel notching one of its biggest jumps of the year.
“The overall theme for the coming weeks is going to be a very volatile trading environment and you are going to have the US and Japan being a significant driver to what is happening in Europe,” said Rabobank strategist Lyn Graham-Taylor.
Wall Street was expected to open around 0.4 per cent higher as investors wait on the release of the May ISM manufacturing index at 10 am ET.
Markets have become particularly sensitive to US data since its central bank, the Federal Reserve, started raising the prospect of scaling back its money-printing program.
Economists polled by Reuters see no change from last month’s ISM reading of 50.7 but its components are likely to be scrutinized ahead non-farm payrolls on Friday.
Earlier a brighter-than-forecast reading on the equivalent PMI data from Europe drove a rebound in the FTSEurofirst 300, which trading flat by 8:38am ET having earlier been down as much as 1 percent.
“The (European) data in general has surprised on the upside this morning which probably partly explains the market fightback,” said HSBC equities strategist Robert Parkes. “all eyes now turn to the ISM. That is arguably one of the biggest, indicator(s), of where we are in the global cycle.”
A mixed reading in Chinese data kept intact worries about its growth momentum though the numbers were not bad enough to trigger sustained selling in either growth-sensitive commodities or currency markets.
Oil dropped to $100 a barrel for the first time in a month in Asian trading, but like share markets it rallied and was up almost 1.5 per cent at $101.80 by 8:20am ET.
In the debt market, safe-haven German bond futures softened. There was also more selling of euro zone periphery debt amid signs its 10-month rally may be drawing to a close.
Speaking in China, ECB President Mario Draghi gave further food for thought to investors, already wondering if a scaleback of Fed stimulus will reverse some of the falls in euro zone periphery bond yields over the last year.