Stock markets move cautiously higher as yuan steadies

On Thursday, the pan-European Euro Stoxx 600 rose 0.87%. Germany’s DAX was up 0.84% and France’s CAC 40 1.03%. The MSCI world equity index, which tracks shares in 47 countries, rose 0.25%. It remains down more than 3% since the start of August.

“There’s a little bit of calm back in the market at the moment,” said Peter Kinsella, global head of FX strategy at UBP. “But the ball is very much in Trump’s court.”

Wall Street recovered earlier losses on Wednesday and finished the day higher. E-Mini futures for the S&P 500 gained 0.34%, suggesting it would build on that recovery on Thursday.

Recession fears 

Investors ran for the safety of bonds this week as fears of a recession grew. Yields on US 30-year bonds fell as low as 2.123% overnight, not far from a record low of 2.089% set in 2016. Ten-year yields dropped further below three-month rates, an inversion that has reliably predicted recessions in the past.

The latest spasm began when central banks in New Zealand, India and Thailand surprised markets on Wednesday with aggressive interest rate cuts.

“Financial markets are raising risks of recession,” said JPMorgan economist Joseph Lupton. “Equities continue to slide and volatility has spiked, but the alarm bell is loudest in rates markets, where the yield curve inverted the most since just before the start of the financial crisis.”

Markets have ramped up their expectations for more easing by the US Federal Reserve, but the question remains how fast Fed policy makers will move.

Source: businesslive.co.za