Recovery for US stocks expected amid global rally

European stocks rallied as investors took some comfort from assurances by the Italian government that a new windfall tax on banks will be capped.

Italy’s benchmark FTSE MIB Index jumped more than 2%, snapping a six-day streak of losses. UniCredit SpA and Intesa Sanpaolo SpA, at the center of Tuesday’s declines when the new tax was unveiled, became Wednesday’s biggest gainers, pushing the Stoxx 600 up 1%. 

Other markets tilted risk-on, with the euro strengthening, copper rebounding and US futures pointing to a recovery on Wall Street. 

Meanwhile, Treasuries steadied ahead of another closely watched bond auction later today. The US government is expected to sell $38 billion of new 10-year notes, $3 billion larger than the last 10-year note debut in May.

The debt auctions will gauge how concerned investors are about a rising US budget deficit, a week after Fitch Ratings decided to strip the US of its top credit rating. Tuesday’s $42 billion sale of three-year notes had a lower-than-expected yield, a sign that demand was stronger than anticipated.

CORPORATE HIGHLIGHTS:

• L’Occitane International SA’s controlling shareholder is in advanced talks on a potential deal to take the skin-care company private at a valuation of around $6.5 billion.
• Country Garden Holdings Co.’s potential default could overshadow even that of China Evergrande Group in late 2021, according to Bloomberg Intelligence.
• Walt Disney Co.’s ESPN has signed a long-term exclusive partnership for sports betting with Penn Entertainment Inc., a regional casino operator.
• Shares in WeWork Inc. fell in post-market trading after the company said there was “substantial doubt” about its ability to continue operating, citing sustained losses and canceled memberships to its office spaces.

Key events this week:

• India rate decision, Thursday
• US initial jobless claims, CPI, Thursday
• Atlanta Fed President Raphael Bostic pre-recorded remarks for employment webinar, Thursday
• UK industrial production, GDP, Friday
• US University of Michigan consumer sentiment, PPI, Friday

Some of the main moves in markets:

STOCKS

• The Stoxx Europe 600 rose 1% as of 9:39 a.m. London time
• S&P 500 futures rose 0.3%
• Nasdaq 100 futures rose 0.4%
• Futures on the Dow Jones Industrial Average rose 0.2%
• The MSCI Asia Pacific Index rose 0.1%
• The MSCI Emerging Markets Index rose 0.4%

CURRENCIES

• The Bloomberg Dollar Spot Index fell 0.1%
• The euro rose 0.2% to $1.0975
• The Japanese yen was little changed at 143.31 per dollar
• The offshore yuan rose 0.3% to 7.2135 per dollar
• The British pound was little changed at $1.2750

CRYPTOCURRENCIES

• Bitcoin fell 0.6% to $29,793.37
• Ether fell 0.2% to $1,860.25

BONDS

• The yield on 10-year Treasuries declined one basis point to 4.01%
• Germany’s 10-year yield was little changed at 2.47%
• Britain’s 10-year yield declined two basis points to 4.37%

COMMODITIES

• Brent crude rose 0.1% to $86.29 a barrel
• Spot gold rose 0.2% to $1,928.58 an ounce

This story was produced with the assistance of Bloomberg Automation.

Related Topics: US stocks