Stocks rise, dollar falls as bond selloff abates: Markets wrap

European equity futures tracked Asian shares higher after stocks and bonds rallied on Wall Street, bringing some relief to financial markets after a series of punishing losses. Traders’ focus now turns to Friday’s US jobs data.

Contracts for the Euro Stoxx 50 rose 0.4%, while US equity futures were steady. The S&P 500 climbed 0.8% Wednesday in New York, its biggest gain in almost three weeks, and the Nasdaq 100 advanced 1.5%, its best day in five weeks.

Gains in Japan, Hong Kong and Australia placed a key index for Asia on track for its best day since August after entering a technical correction Wednesday. Mainland China markets remain shut for a week-long holiday. Oil ticked higher, paring losses from its steepest one-day drop in a year.

The dollar fell against all its Group-of-10 peers, with the yen strengthening as much as 0.6%. Traders had speculated about official Japanese intervention in the market Tuesday when the currency spiked higher after touching 150 per dollar. However, early indications show that may not have been the case.

Australian and New Zealand bonds rallied, mirroring Wednesday’s rebound in Treasuries. Yields on 10- and 30-year US government debt had slipped six basis points in US trading, paring a run of steep increases. The selloff in longer-maturity Treasuries has rivaled some of the most notorious market meltdowns in US history.

US government bonds advanced modestly in Asian trading.

“We are going all in on long-duration, high-grade bonds,” Adam Coons, a fund manager at Winthrop Capital Management, said on Bloomberg Television. “We are really at an inflection point where interest rates in the US just can’t go up that much higher.”

The easing of Treasury yields was helped by economic data that prompted traders to scale back forecasts for Federal Reserve tightening this year.

An out-lier, Japan’s 20-year sovereign bond yield jumped to the highest level since 2013 following a weak auction of super-long-dated debt.

US companies added the fewest number of jobs since the start of 2021 in September, according to a survey from the ADP Research Institute in collaboration with Stanford Digital Economy Lab. A separate report from the Institute for Supply Management showed the services sector pulled back modestly last month to the lowest level this year. Friday’s nonfarm payrolls figures are forecast to show hiring slowed in September.

‘Oversold market’

Bill Gross, co-founder and former chief investment officer of Pacific Investment Management Co., said retail investors that hold bonds in exchange-traded funds were adding to the pressure in Treasury markets over the past week.  “We are seeing a little bit of oversold market” as 10-year Treasury yields approach 5%, he said in an interview with Bloomberg Television.

Inflation data in South Korea overshot estimates, supporting the won. Doosan Robotics shares rose on their debut in Seoul after the nation’s largest initial public offering this year. Shares in Sunac China Holdings jumped after the developer won court approval for its multibillion-dollar offshore debt restructuring plan.

Elsewhere in Asia, Taiwan shares rose, apparently shrugging off news that officials will investigate whether local firms helping Huawei Technologies Co. with chipmaking plants in China violated US sanctions. Sri Lanka’s central bank cut its benchmark rate for a third time this year to help revive economic growth.

In commodities, West Texas Intermediate futures were moderately higher after slumping 5.6% Wednesday to settle below $85 a barrel. The decline reflected concern over flagging demand for the commodity as higher interest rates and a strong dollar weigh on the global economy.

Key events this week:

• China has week-long holiday
• France industrial production, Thursday
• BOE Deputy Governor Ben Broadbent, Riksbank First Deputy Governor Anna Breman participate at panel discussion, Thursday
• US trade, initial jobless claims, Thursday
• San Francisco Fed President Mary Daly speaks at the Economic Club of New York, Thursday
• Germany factory orders, Friday
• US unemployment rate, nonfarm payrolls, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures were little changed as of 2:58 p.m. Tokyo time. The S&P 500 rose 0.8%
• Nasdaq 100 futures were little changed. The Nasdaq 100 rose 1.5%
• Japan’s Topix rose 2%
• Hong Kong’s Hang Seng rose 0.5%
• Euro Stoxx 50 futures rose 0.5%

Currencies

• The Bloomberg Dollar Spot Index fell 0.2%
• The euro rose 0.1% to $1.0518
• The Japanese yen rose 0.4% to 148.59 per dollar
• The offshore yuan was little changed at 7.3168 per dollar

Cryptocurrencies

• Bitcoin was little changed at $27,653.38
• Ether was little changed at $1,640.6

Bonds

• The yield on 10-year Treasuries declined three basis points to 4.71%
• Australia’s 10-year yield declined nine basis points to 4.57%

Commodities

• West Texas Intermediate crude rose 0.4% to $84.59 a barrel
• Spot gold rose 0.3% to $1 826.53 an ounce