European stocks, futures climb; dollar declines with Treasuries

Bloomberg

Stocks in Europe rise on Monday along with US 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 UK’s supermarket company J Sainsbury sent the grocer’s shares up more than 11%.
Treasury yields rise 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 on 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 signalled 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 scrutinise US 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 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.
The Stoxx Europe 600 rises 0.2% as of 9:19 am London time and futures on the S&P 500 also rise 0.3%.
While futures on the Nasdaq 100 climb 0.3%, futures on the Dow Jones Industrial Average also rise 0.2%. The MSCI Asia Pacific Index rises 1.4% and the MSCI Emerging Markets Index also surges by 1.1%.
While the Bloomberg Dollar Spot Index falls 0.2%, the euro rises 0.2% to $1.1727. The Japanese yen falls 0.2% to 109.96 per dollar and the offshore yuan rises 0.1% to 6.4915 per dollar. The British pound climbs 0.3% to $1.3658.
The yield on 10-year Treasuries advanced two basis points to 1.27% and Germany’s 10-year yield advanced three basis points to -0.47%.
Britain’s 10-year yield advanced three basis points to 0.55%
Brent crude rises 2.4% to $66.76 a barrel and spot gold also surges by 0.2% to $1,785.19 an ounce.