U.S. equity futures steadied on Friday and stocks in Europe rose, while Treasuries halted an eight-day rally fueled by concerns about global growth amid the spread of Covid-19 variants.
The Stoxx Europe 600 index advanced, with all sectors in the green, as some of the world’s biggest money managers bet on a swift comeback for the battered reflation trade. Contracts on the S&P 500 and Nasdaq 100 edged higher following Thursday’s selloff in the underlying gauges. The dollar was flat against a basket of major currencies.
JPMorgan Asset Management, BlackRock Inc. and Morgan Stanley Wealth Management — which together account for some $12 trillion in assets — are among money managers saying global growth is still on track. The European Central bank on Thursday indicated it will tolerate an inflation overshoot, implying an even longer period of loose policy to support the recovery.
“The sharp reversal in reflation trades looks overdone to us,” Barclays Plc strategists led by Emmanuel Cau wrote in a note. Still, “erratic price action could continue” amid “poor summer liquidity, activity data peaking, rising Covid cases, supply bottlenecks and the Fed closer to tapering,” they said.
Elsewhere, MSCI Inc.’s Asia-Pacific stock gauge pared declines after reaching the lowest since mid-May. Economically sensitive sectors such as industrials sapped the index, with equities from Japan to Australia retreating.
