(Bloomberg) -- Stocks extended a rebound and major currencies rallied versus the dollar after the S&P 500 closed above a key technical level and negative pressure on UK markets eased.
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A gauge of Asian equities rose, led by technology stocks in Hong Kong, while US equity futures advanced about 2%. Shares of Chinese electric-vehicle maker BYD Co. jumped more than 6% on an expected surge in third-quarter profit, putting other vehicle makers in the country in focus.
A Bloomberg gauge of the greenback declined for a second day as the New Zealand dollar surged on rate-hike bets and the pound gained following a Financial Times report that the Bank of England was likely to delay the sale of government bonds to foster greater stability in gilt markets.
The yen paused in its run toward the closely watched 150 per dollar level, which has investors on high alert for possible intervention. Japanese Finance Minister Shunichi Suzuki said he was watching market moves with a sense of urgency.
Chinese junk dollar bonds dropped to a record low, as a property crisis sparked by a crackdown on excessive borrowing and a slide in home sales show few signs of turning around without more policy steps.
China’s decision to delay the publication of key economic data including third-quarter gross domestic product may inject a note of caution to trading in the region. The Communist Party congress provided few signs of a let up in China’s Covid-zero and property-market policies that are weighing on the economy.
Treasury yields declined during Asian trading, as did rates on Australia’s benchmark bonds. Government bond yields in New Zealand bucked the trend, rising with the country’s currency after inflation data remained stronger than expected. The figures underscored risks to markets from persistently high consumer prices even in countries at the vanguard in tightening monetary policy.
The latest US recession probability models by Bloomberg economists Anna Wong and Eliza Winger forecast a higher probability of such an event across all time frames -- with the 12-month estimate of a downturn by October 2023 hitting 100%. That’s up from 65% for the comparable period in the previous update.
Amid debate about when stocks might find a bottom, Morgan Stanley’s Mike Wilson wrote that the rout which took the S&P 500 to test a “serious floor of support” could lead to a technical recovery. The strategist, who’s one of Wall Street’s most-prominent bearish voices, said he “would not rule out” the measure rising to about 4,150. That’s 13% above current levels.
Still, Wells Fargo Investment Institute expects to see further challenges to company profits. “Our earnings estimates have been below the consensus for quite some time,” global strategist Gary Schlossberg said on Bloomberg Television. “We think that there’s still some further downward revisions to come.”
Elsewhere in markets, oil rose after Monday’s choppy session as investors weighed signs of a tight market against concerns over a global economic slowdown. Gold rose and Bitcoin continued to trade below $20,000.
Key events this week:
US industrial production, NAHB housing market index, Tuesday
Fed’s Neel Kashkari speaks, Tuesday
Euro area CPI, Wednesday
EIA crude oil inventory report, Wednesday
US MBA mortgage applications, building permits, housing starts, Fed Beige Book, Wednesday
Fed’s Neel Kashkari, Charles Evans, James Bullard speak, Wednesday
US existing home sales, initial jobless claims, Conference Board leading index, Thursday
Euro area consumer confidence, Friday
Some of the main moves in markets:
Stocks
The S&P 500 futures rose 1.8% as of 1:43 p.m. Tokyo time. The S&P 500 rose 2.7% Monday
The Nasdaq 100 futures added 2%. The Nasdaq 100 rose 3.5%
Japan’s Topix index gained 1.1%
South Korea’s Kospi index rose 1.1%
Hong Kong’s Hang Seng Index was up 1%
China’s Shanghai Composite Index increased 0.2%
The S&P/ASX 200 Index climbed 1.8%
Currencies
The Bloomberg Dollar Spot Index fell 0.3%
The euro rose 0.2% to $0.9859
The Japanese yen rose 0.1% to 148.86 per dollar
The offshore yuan rose 0.2% to 7.1981 per dollar
The British pound rose 0.4% to $1.1398
Cryptocurrencies
Bitcoin rose 0.2% to $19,573.22
Ether rose 0.4% to $1,335.01
Bonds
The yield on 10-year Treasuries fell five basis points to 3.96%
Australia’s 10-year bond yield dropped 11 basis points to 3.91%
Commodities
West Texas Intermediate crude rose 0.8% to $86.16 a barrel
Spot gold rose 0.5% to $1,659.11 an ounce
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