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Singapore - At last Europe’s markets are catching a break.
Stocks in the region rose for the first time in eight days, led by a rally in banks, credit markets strengthened and Italian and Portuguese government bonds jumped.
Catalysing the recovery was a surge in Deutsche Bank AG shares after the German lender was said to consider buying back some of its debt. Having plummeted almost 6% on Tuesday, oil climbed back above $28 a barrel before an update on American stockpiles, boosting currencies of commodity-producing countries. US stock-index futures rose.
Concern over the creditworthiness of European banks and oil’s decline sent equities reeling in the past week, ensuring investors will focus on Federal Reserve chair Janet Yellen’s testimony before US Congress on Wednesday. After the Bank of Japan’s move into negative interest rates largely failed to assuage market jitters, Yellen will need to calibrate her commentary carefully to avoid further fueling volatility.
“When it feels this bad, it’s usually a good buying opportunity,” said Kevin Lilley, who manages European equities at Old Mutual Global Investors in London. His firm oversees about $32bn. “But we’ve just been through a huge crisis of confidence and I think a long-term rebound is still very dependent on central-bank policy and global macro data.”
The US presidential election is also coming onto investors’ radars. Vermont Senator Bernie Sanders defeated Hillary Clinton in the New Hampshire Democratic Primary on Tuesday, while Donald Trump prevailed over a crowded Republican field.
While markets in Singapore and Malaysia returned from Lunar New Year holidays Wednesday, mainland China, Hong Kong, Taiwan, South Korea and Vietnam remained closed.
Stocks
The Stoxx Europe 600 Index advanced 2.4% at 12:52, moving out of so-called “oversold” territory. The equity benchmark now trades at 13.8 times estimated earnings, about 21% below its April 2015 peak. A gauge tracking stock swings has jumped 49% this year.
A measure of lenders posted the best performance of the 19 industry groups on the Stoxx 600, with Deutsche Bank AG surging 13%, the most since 2011, as the possible bond buyback plan eased credit-market stress. Commerzbank AG climbed 8.6%.
Carlsberg gained 4.6% after the brewer reported a smaller-than-projected drop in quarterly profit and forecast higher earnings this year.
Tullow Oil dropped 7.1% after reporting a wider- than-expected full-year loss as tumbling crude prices forced the company to record writedowns. AP Moeller-Maersk fell 2.4% after the shipping company posted an 84% plunge in 2015 profit and wrote down the value of its oil assets.
