Equity markets rebounded after a torrid week when investors questioned whether central banks have the tools to shore up the global economy. Federal Reserve Chair Janet Yellen in a second day of testimony said the Fed was assessing the impact of the swings in the markets on the economy but she doubted that would prompt it to reverse course and cut rates. Investors will be watching U.S. data on retail sales and consumer confidence to gauge how America is weathering the global slowdown.
“I’d be weary of calling anything a lasting rebound until I see it,” said Ben Kumar, an investment manager at Seven Investment Management in London. His firm oversees about $13 billion. “It’s crazy that the market is priced for recession and a complete failure of the financial system. But you wouldn’t want to call it the end of the rout quite yet. Nobody wants to be the first bull now.”
Contracts on the Standard & Poor’s 500 Index expiring in March advanced 0.7 percent, indicating equities will rebound from Thursday’s selloff. American International Group Inc. added 2 percent in European trading after lifting its dividend and announcing a $5 billion share buyback, even as it posted a second-straight quarterly loss.
Reports will probably show U.S. retail sales were little changed in January, while a measure of consumer sentiment improved in February, according to economist forecasts compiled by Bloomberg.
The cost of insuring corporate debt fell from the highest since 2013. The Markit iTraxx Europe Index of credit-default swaps on investment- grade corporate debt fell two basis points to 122 basis points. A measure of swaps on junk-rated companies dropped eight basis points to 476 basis points. Indexes of swaps tied to financial companies senior and junior debt declined.Germany’s 10-year bond yield rose two basis points to 0.21 percent, having slid on Thursday to its lowest since April on investor demand for havens. Treasury 10-year yields rose two basis points, to 1.69 percent, rising from the lowest since August 2012. Italy’s 10-year bond yield fell three basis points to 1.69 percent and Spain’s was little changed at 1.78 percent, still up from 1.64 percent on Feb. 5.
|EURO STOXX 50 Index||2,728.43||+48.08||+1.79%|