Global markets: Sell-off pauses as Asia and Europe rally

Reuters
/ Kai Pfaffenbach

• Global markets rally on Friday, pausing after several
  days of aggressive selling.
• “It’s a pause for breath, we’ve had a sharp drawdown
  and now the market has taken a breath,” Kerry Craig, global
  market strategist at JPMorgan Asset Management said.
• Stocks in Asia and Europe are higher, while US futures
  point to gains of more than 1% in US equities when the market
  opens in a few hours.

Stock markets in Europe and Asia are rallying on Friday
after a fierce sell-off gripped global markets over the previous
four days of trading.

At the close in Asia, all major share indexes had pulled back at
least some of their losses over the past week, although all
remained significantly lower than at the start of the week.

After 30 minutes of trading in Europe, indexes were largely
higher by close to 1%, with Germany’s DAX leading the way higher.

It is unclear whether Friday’s rally is simply a pause in a
longer downward move for markets, or whether the last few days
have just been a blip in a continuing uptrend, but Stephen Innes,
head of trading for Asia Pacific at OANDA put the rally down to
tiredness in the market.

“This market is exhausted from all after the most
significant sell-off in global equities since February,” he said
in an email on Friday morning.

Kerry Craig, global market strategist at JPMorgan Asset
Management agreed, saying: “It’s a pause for breath, we’ve had a
sharp drawdown and now the market has taken a breath.”

Here’s how things look out there just after 8.30 a.m. BST
(3.30 a.m. ET):

ASIA: Major indexes climbed, with the
China A50 index gaining close to 2.5%, and Hong Kong’s benchmark
Hang Seng index jumping around 1.8%. Stocks are still down
substantially from the beginning of the week, however.

EUROPE: European stocks have broadly
bounced back from yesterday’s sharp falls, with a sea of green
across the continent in the first hour of trading. Germany’s DAX
leads the way, up 1% to 11,657 points, while the FTSE 100 in
London is not far behind, trading at 7,038, a gain of just less
than 0.5%.

US FUTURES: After
a 2% fall for the Dow on Thursday, it looks like Friday
should see US equities bounce a little. Futures currently point
to all three major US indexes gaining when they open later in the
day at 2.30 p.m. BST (9.30 a.m. ET). Dow futures are up 1.1%,
S&P 500 futures point to a 1.2% gain, and the Nasdaq is set
to bounce 1.7%.

GOLD: Gold rallied sharply during the
broader market sell-off, reflecting its role as a haven asset in
times of turmoil. Thursday’s gain of 2.5% was the
largest in percentage terms since June 24, 2016, the day after
the UK voted to leave the EU. It has pulled back on Friday,
reflecting the end of the rout, and is down around 0.4% at $1,222
per ounce.

VOLATILITY: The CBOE Volatility Index,
better known as the VIX,
has more than doubled in the last week, but has pulled back
from its highs on Friday. On Thursday the index hit 24.5, its
highest level since February’s market correction, but by Friday
morning it has dropped 11% to 21.9.

CRYPTO: Cryptocurrencies have also rebounded on
Friday, following a rout which saw many tokens lose more than 10%
of their value. Bitcoin, which dropped as much as 5% on Thursday,
has regained its composure and is 0.5% higher at $6,320 per coin.

OIL: After losing as much as 3% of its value and
briefly dropping below $80 per barrel, oil has rallied also,
gaining 1.1% to trade at above $81 on Friday morning.