Market Overview

Europe Upbeat on Italy Hopes; Asia Stocks Struggle

European stocks climbed alongside the euro and Italian bonds rallied on reports the government will rein in spending plans. Asian stocks dropped as investors weighed continuing concerns in Indonesia and India and strength in commodity prices. The common currency strengthened after a Corriere della Sera report that Italy’s draft budget plan will pledge to cut the deficit to 2 percent in 2021, revising the government’s initial proposal. Italian bonds surged after four days of selling and the Stoxx Europe 600 Index rebounded from Tuesday’s drop led by banks.

The regional Asia Pacific share index fell for a third day, with Japanese and South Korean equities leading declines. The rupiah and the rupee remained under pressure on surging oil prices. Crude in New York climbed above $75 a barrel, trading near the highest level in almost four years. Investors remain on edge this week with the market impact of European politics and emerging-market strains still high on the agenda. A close call between a U.S. and a Chinese warship in the disputed South China Sea added to tensions between two countries already embroiled in an escalating trade war. Meanwhile, Treasury yields remain near the top of the recent range after Federal Reserve Chairman Jerome Powell welcomed wage growth but expressed confidence that low unemployment won’t spur a takeoff in prices that forces more aggressive tightening.

Futures on the S&P 500 Index advanced 0.2 percent as of 8:01 a.m. London time, the highest in almost two weeks. The Stoxx Europe 600 Index sank 0.5 percent to the lowest in two weeks. Germany’s DAX Index dipped 0.4 percent. The U.K.’s FTSE 100 Index decreased 0.3 percent to the lowest in more than a week. The MSCI Asia Pacific Index sank 0.6 percent to the lowest in more than two weeks. The MSCI Emerging Market Index declined 0.1 percent to the lowest in two weeks. The yield on 10-year Treasuries gained one basis point to 3.07 percent. Germany’s 10-year yield gained three basis points to 0.45 percent, the largest gain in more than a week.

Europe Upbeat on Italy Hopes; Asia Stocks Struggle, Bloomberg, Oct 03
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