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London - US index futures rose, indicating shares will advance for the first time since Britain voted to leave the European Union (EU), amid optimism that policy makers are committed to limit the fallout from the UK’s exit.
Contracts on the S&P 500 Index expiring in September rose 0.9% to 2 003.8 at 7:38 a.m. in New York, after the gauge posted its worst two-day drop since August. Dow Jones Industrial Average futures climbed 175 points, to 17 160.
The UK’s decision last week triggered a rush toward safe havens as global equities lost more than $1trn in market value and the S&P 500 tumbled 5.3% to erase its annual advance.
UK Prime Minister David Cameron will face EU leaders at a dinner in Brussels on Tuesday, after both the Bank of England and European Central Bank pledged to increase liquidity.
"Slowly but surely, we will get more clarity, but there are bound to be periods in which the news flow is less certain," said Daniel Murray, head of research at EFG Asset Management in London.
"The next few months are going to be volatile."
EU leaders are gathering for a two-day European Council summit to discuss Britain’s exit. Germany, France and Italy prodded the UK government to start the process, saying they want to move forward and limit market risks.
Britain’s Chancellor of the Exchequer George Osborne sought to reassure investors on Monday, saying that contingency plans were in place to shore up the economy amid ongoing volatility, but that Brexit won’t be "plain sailing" - something that Cameron reiterated in Parliament.
Financial leaders including International Monetary Fund Managing Director Christine Lagarde and US Treasury Secretary Jacob J. Lew have said that the market reaction to Brexit had been orderly so far and that central banks have worked effectively to protect liquidity in the system.
Risk assets have been under pressure since the British voted to secede from the EU, raising concerns that an already-fragile global economic recovery will falter as trade snarls in one of the world’s biggest consumer blocs.
Investors have pushed back bets on Federal Reserve interest-rate increases, after expectations for higher borrowing costs had crept up before the Brexit vote. Now, they are pricing in a 8% probability of a rate cut in July.
Prior to the UK’s referendum, there was zero prospect for a cut and a 50% chance of an increase in December.
Bank of America and Citigroup climbed more than 2% in early New York trading after financial companies bore the brunt of the selloff in the past two days.
LendingClub added 3.3% after naming Scott Sanborn chief executive officer and announcing job cuts. Dow Chemical gained 1% after saying it will cut about 2 500 jobs and shut plants in North Carolina and Japan.
