European Shares Set To Extend Gains On UK Policy U-turn

European stocks look set to open sharply higher on Tuesday as a dramatic U-turn in British fiscal policy boosted investors’ appetite for riskier assets.

British Prime Minister Liz Truss has apologized for the tumultuous first few weeks of her leadership, but insisted she is going nowhere and would lead the Conservative Party into the next general election.

The U.S. dollar took a breather and bond yields dipped, boosting demand for bullion.

Oil prices rose about 1 percent despite reports suggesting that the Biden administration could sell oil from the Strategic Petroleum Reserve this week in a bid to dampen fuel prices before next month’s congressional elections.

Asian markets followed Wall Street higher and U.S. futures advanced, as investors shifted their focus to the latest round of corporate earnings results, with several prominent companies including Johnson & Johnson, Netflix, Union Pacific and American Express due to unveil their financial results this week.

On the economic front, Germany’s ZEW economic confidence survey results are due later in the session. Economists expect the economic sentiment index to fall to -65.7 in October from -61.9 in the previous month.

Across the Atlantic, trading may be impacted by reaction to the latest reports on industrial production and homebuilder confidence.

Elsewhere, China delayed the publication of its third quarter GDP data along with other major indicators without explanation amid the 20th party conference of the ruling Communist Party.

U.S. stocks rose sharply overnight as Treasury yields pulled back and Bank of America raised its annual outlook for revenue.

The Dow climbed 1.9 percent, the S&P 500 jumped 2.7 percent and the tech-heavy Nasdaq Composite soared 3.4 percent.

European stocks followed suit as Britain’s new finance minister Jeremy Hunt reversed almost all of the tax measures announced previously that contributed to turmoil in the global bond markets.

The pan European Stoxx 600 gained 1.8 percent. The German DAX rallied 1.7 percent, France’s CAC 40 index added 1.8 percent and the U.K.’s FTSE 100 rose 0.9 percent.