US stocks rebound on deal news; dollar rises, euro falls

Bloomberg

US stocks rose amid deal news, as major averages pared losses after a brutal month of selling. The dollar advanced versus the euro as political uncertainty hit Germany, while Treasuries edged lower.
The S&P 500 headed for just its sixth advance in October and remains on track for its worst month since 2010. The Nasdaq indexes outperformed after IBM’s $33 billion purchase of Red Hat Inc. jolted tech shares higher. Brazilian assets rallied after a Jair Bolsonaro swept to power. The Stoxx Europe 600 Index rallied after HSBC Holdings Plc earnings beat expectations, and extended gains as automakers surged on news China may cut taxes on car purchases by half. Earlier in Asia the mood had been more cautious, with shares falling in Tokyo, China and South Korea.
Global equities have lost almost $8 trillion of value this month, set for the biggest wipeout since the height of the financial crisis a decade ago on concerns ranging from peak earnings growth and the US-China trade war to the end of easy money and rising rates. But stocks are arguably starting to look cheap, while traders are paring wagers for Federal Reserve hikes in 2019.
The euro swung between losses and gains as German Chancellor Angela Merkel confirmed reports she will quit as head of her Christian Democratic party after nearly two decades, though she intends to see out her term as head of state. It follows the governing parties’ worst results in decades in a regional election. The pound also fluctuated before UK Chancellor of the Exchequer Philip Hammond delivers the country’s budget.
Italian debt rallied after S&P Global Ratings affirmed the nation’s rating at BBB but lowered the outlook to negative from stable. Core European bonds declined alongside Treasuries as the risk-on mood gathered strength. The dollar rose while gold dropped. Oil was steady as traders assessed mixed supply signals. Elsewhere, Brazilian assets jumped after far-right candidate Jair Bolsonaro won the presidential election. Mexico’s peso slumped more than 1 percent after a vote to scrap a $13 billion airport.
Monetary policy decisions are due in Japan and the UK. The final US jobs report before the November midterm elections may show hiring improved as payrolls rose about 190,000, and the unemployment rate held at a 48-year low of 3.7 percent, analysts forecast.
The S&P 500 Index jumped 1.3 percent as of 9:31 am New York time, the largest climb in almost two weeks. The Nasdaq 100 added 1.6 percent and the Dow Jones Industrial Average rose 1 percent. The Stoxx Europe 600 Index surged 1.7 percent to the highest in a week. Germany’s DAX Index surged 2.1 percent to the highest in a week on the biggest jump in about seven months. Brazil’s Ibovespa Index rose 2.1 percent. The MSCI Emerging Market Index climbed 0.5 percent, the first advance in a week.
The Bloomberg Dollar Spot Index increased 0.4 percent to the highest in about 17 months. The euro decreased 0.2 percent to $1.1382. The British pound fell less than 0.05 percent to $1.2823. The Japanese yen sank 0.4 percent to 112.34 per dollar, the biggest dip in almost two weeks.
The yield on 10-year Treasuries jumped two basis points to 3.09 percent, the largest surge in more than a week. Germany’s 10-year yield increased four basis points to 0.39 percent, the biggest climb in more than a week. Britain’s 10-year yield climbed two basis points to 1.403 percent, the first advance in more than a week. The spread of Italy’s 10-year bonds over Germany’s declined 18 basis points to 2.912 percentage points to the smallest premium in more than three weeks.