European stocks look set to rebound on Tuesday after analysts said the global market selloff due to the carry trade unwind is overdone.
U.S. stock futures bounced back after a three-day rout on fears of a possible U.S. recession and extreme valuations in the technology sector.
“A recession is unlikely in the U.S. unless it is proceeded by a financial crisis that causes an economy-wide recession,” Ed Yardeni of Yardeni Research wrote in a report.
“One print alone is not enough to shift the narrative on growth fears,” JPMorgan Chase & Co.’s Andrew Tyler wrote in a note to clients.
Encouraging U.S. service sector activity data released on Monday also helped eased concerns of an abrupt downturn.
In Asia, Japan’s Nikkei average jumped more than 7 percent as the yen weakened after a five-day surge against the U.S. dollar.
Other Asian markets also staged a significant rebound following their worst single day drop since 2008, driven by a wave of bargain hunting.
Gold was marginally lower but held above $2,400 per ounce. Oil prices jumped more than 1 percent in Asian trade on fears that a spreading Middle East conflict could hit supplies.
Israel and the U.S. are bracing for significant escalation after Iran and its regional allies vowed retaliation for the deaths of Hamas and Hezbollah leaders.
In economic releases, German industrial orders data for June and Eurozone retail sales figures may garner investor attention later in the day.
Overnight, U.S. stocks ended with deep losses as recession worries and a widespread shift in sentiment around the technology sector overshadowed data showing a rebound in the U.S. services sector activity from a four-year low in July.
The tech-heavy Nasdaq Composite plunged 3.4 percent and the S&P 500 plummeted 3 percent to hit three-month lows while the Dow slumped 2.6 percent.
European stocks hit a six-month low on Monday, with fears over slowing U.S. growth, some weak eurozone economic data and heightened Middle East tensions weighing on markets.
The pan European STOXX 600 fell 2.2 percent. The German DAX dipped 1.8 percent, France’s CAC 40 shed 1.4 percent and the U.K.’s FTSE 100 tumbled 2 percent.
Market Analysis
European Shares Poised For Rebound
2024-08-06 05:35:34
