Global Stocks Rise as Focus Shifts to Earnings, U.S. Election
European stocks bounce back from an earlier fall led by the banking sector
By RIVA GOLD
Updated Oct. 10, 2016 9:12 a.m. ET
Global stocks started the week higher as investors shifted their focus to the coming earnings season and the U.S. presidential election.
Futures pointed to a 0.5% opening gain for the S&P 500, reversing some of its losses from the previous session. Brent crude oil rose 1.3% to $52.58 a barrel, spurring a recovery in shares of oil and gas companies.
Shares of Mylan NV were up over 13%, leading gains in premarket trading, after the U.S.-listed pharmaceuticals firm agreed to pay $465 million to settle allegations that it overcharged the government for its EpiPen products.
Elsewhere, Chinese markets advanced, while stocks in Europe recovered from an early fall in the banking sector. The Stoxx Europe 600 was recently up 0.5%.
Analysts pointed to thin trading volumes due to holidays in Japan, Hong Kong and Canada, as well as Columbus Day in the U.S., with the Treasury market closed.
Investors said sterling’s steep fall highlighted existing concerns about the U.K.’s vote to leave the European Union. ENLARGE
Investors said sterling’s steep fall highlighted existing concerns about the U.K.’s vote to leave the European Union. PHOTO: REUTERS
Wall Street had ended a touch lower Friday following a slightly softer-than-expected monthly jobs report. Still, the jobs figures ultimately did little to shift investors’ expectations for the course of U.S. interest rate rises.
U.S. Federal Reserve Vice Chairman Stanley Fischer said Sunday that the most recent jobs report was “solid, showing continued improvement” and that the decision to hold rates steady in September was a “close call.”
Several Fed officials are scheduled to speak later in the week, keeping the central bank in the headlines.
Investors were also looking ahead to the start of the third-quarter earnings season, which gets under way later this week with a report from Alcoa.
“If we can somehow get to flat in earnings, that would be very supportive of equity markets in general,” said Jon Adams, investment strategist at BMO Global Asset management.
“At some point, we need to see top line growth to justify [current] valuations,” he said.
Meanwhile, in currencies, the Mexican peso was up 1.9% against the dollar following a debate between the two U.S. presidential candidates and after prominent Republicans abandoned Donald Trump after the release of a 2005 video.
Analysts said the weekend developments prompted the market to further discount the chance of a Trump presidency, supporting the peso, the Canadian dollar and emerging market currencies, which are perceived as vulnerable due to Mr. Trump’s stance on trade.
Gold rose 0.7% to $1,260 an ounce.
Elsewhere, the Stoxx Europe 600 advanced in afternoon trade after three consecutive days of losses, as the euro fell 0.4% against the dollar to $1.1166.
Bank shares had weighed on European stocks earlier in the morning as shares of Deutsche Bank fell, but the German lender later recovered to trade up 1.9%.
Investors in the region also continued to focus on negotiations between the U.K. and the European Union. The British pound was down 0.5% against the dollar at $1.2380 after briefly falling as much as 6% in a few minutes during Asian trading hours Friday, while the yield on 10-year U.K. gilts climbed to 0.997%.
European Central Bank President Mario Draghi said Saturday that the U.K.’s vote to leave the EU was very significant. “To think that it won’t have any consequence would be to hope for too much,” he said.
Despite a recovery in the currency, investors said Friday’s steep fall highlighted continued concerns about the U.K.’s vote to leave the European Union and its implications for sterling.
“The U.K. in many ways is looking like a vulnerable emerging market economy, with a huge current-account deficit and alarming political trends,” said Chris Scicluna, head of economic research at Daiwa Capital Markets Europe. He expects the British currency to continue to decline sharply against the dollar in coming months.
Earlier, Shanghai stocks gained 1.5% as Chinese markets reopened from a week-long holiday, even after the Chinese central bank set the yuan’s reference exchange at a six-year low against the dollar.
Analysts said the market got a lift from recent moves by Chinese cities to impose purchasing restrictions on the property sector, which could direct funds out of real estate and into the stock market.
Markets in Hong Kong and Japan were closed for a holiday.
—Shen Hong contributed to this article.
Write to Riva Gold at
riva.gold@wsj.com