News | Finance: Market meltdown relents as US futures point to major rebound

Finance: Market meltdown relents as US futures point to major rebound

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  • Global markets rally on Friday, pausing after several days of aggressive selling.
  • "It’s a pause for breath, we’ve had a sharp drawdown and now the market has taken a breath," Kerry Craig, global market strategist at JPMorgan Asset Management said.
  • Stocks in Asia and Europe are higher, while US futures point to gains of more than 1% in US equities when the market opens in a few hours.

Stock markets in Europe and Asia are rallying on Friday, with US futures pointing to a significant rebound after a fierce sell-off gripped global markets over the previous four days of trading.

By 7.10 a.m. ET, around two and a half hours before the market open, futures point to both the S&P 500 and the Nasdaq bouncing more than 1%, and the Dow Jones opening 0.9% higher.

The rebound is being seen around the globe, and earlier at the Asian close, all major share indexes had pulled back at least some of their losses over the past week, although all remained significantly lower than at the start of the week.

At the end of the morning in Europe, indexes were almost all in positive territory, with a 0.7% rally in the UK's FTSE 100 the standout.

It is unclear whether Friday's rally is simply a pause in a longer downward move for markets, or whether the last few days have just been a blip in a continuing uptrend, but Stephen Innes, head of trading for Asia Pacific at OANDA put the rally down to tiredness in the market.

"This market is exhausted from all after the most significant sell-off in global equities since February," he said in an email on Friday morning.

Kerry Craig, global market strategist at JPMorgan Asset Management agreed, saying: "It’s a pause for breath, we’ve had a sharp drawdown and now the market has taken a breath."

"It’s like a Jenga tower. The market has been a tower of blocks, it’s been strong over [the] past 12-18 months but then a few of the bottom blocks have been knocked out. That doesn’t mean it’s going to collapse, it just means there’s more risk in the market than there had been."

Here's how things look out there:

ASIA: Major indexes climbed, with the China A50 index gaining close to 2.5%, and Hong Kong's benchmark Hang Seng index jumping around 2.1%. Stocks are still down substantially from the beginning of the week, however.

EUROPE: European stocks have broadly bounced back from yesterday's sharp falls, with a sea of green across the continent in the first hour of trading. The FTSE is 0.7% higher at 7,027 points, while Germany's DAX is 0.2% up, and France's CAC is 0.5% higher.

US FUTURES: After a 2% fall for the Dow on Thursday, it looks like Friday should see US equities bounce a little. Futures currently point to all three major US indexes gaining when they open later in the day at 9.30 a.m. ET. Dow futures are up 0.9%, S&P 500 futures point to a 1% gain, and the Nasdaq is set to bounce 1.6%.

GOLD: Gold rallied sharply during the broader market sell-off, reflecting its role as a haven asset in times of turmoil. Thursday’s gain of 2.5% was the largest in percentage terms since June 24, 2016, the day after the UK voted to leave the EU. It has pulled back on Friday, reflecting the end of the rout, and is down around 0.25% at $1,224 per ounce.

VOLATILITY: The CBOE Volatility Index, better known as the VIX, has more than doubled in the last week, but has pulled back from its highs on Friday. On Thursday the index hit 24.5, its highest level since February's market correction, but by Friday morning it has dropped to 19.8.

CRYPTO: Cryptocurrencies have also rebounded on Friday, following a rout which saw many tokens lose more than 10% of their value. Bitcoin, which dropped as much as 5% on Thursday, has regained its composure and is 0.25% higher at $6,316 per coin.

OIL: After losing as much as 3% of its value and briefly dropping below $80 per barrel, oil has rallied also, gaining 0.5% to trade at $80.63.

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By Kwame Ntow 12/10/2018 07:14:00