After days of losses, US equity futures have rebounded strongly as European shares recovered from a two-day slide. The Dow Jones Industrial Average rose 1.2 percent in premarket trading on Thursday, while the S&P 500 gained 0.9 percent and Nasdaq Composite added 1.3 percent. European stocks were up on Thursday morning, boosted by encouraging economic data from France and Germany and a late recovery across Wall Street after heavy losses on Wednesday due to tech sector concerns. In this article, we will take a look at how the US equity markets are responding to the global market movements and what traders can expect in the coming weeks.
European shares recover
European shares recovered strongly on Friday, led by a rebound in banks and miners, after a weak start to the week on concerns about the global economy.
The pan-European STOXX 600 index was up 1.4 percent by 0900 GMT, with banks and miners – which are among the most sensitive to economic cycles – leading gains.
U.S. equity futures also rebounded strongly, indicating a positive start to trading on Wall Street later in the day.
European shares had started the week weakly on concerns about the global economy after data showed manufacturing activity in China contracted for a fourth month in a row in August.
But Friday’s recovery suggested those fears may have been overdone, at least for now.
US equity futures rebound
European shares clawed back some of the previous day’s heavy losses on Wednesday, with investors reassured by a strong rebound in U.S. equity futures.
The pan-European STOXX 600 index was up 1.2 percent by 0820 GMT after tumbling 3 percent in the previous session, its biggest one-day drop since June 2016.
U.S. stock markets are set for a sharp rebound at the open, with Dow Jones futures up 1.3 percent and S&P 500 futures up 1.1 percent.
The rebound came after a bruising day for global markets on Tuesday, when fears about an escalation in the U.S.-China trade war sent shockwaves through financial markets.
Why the rebound?
There are a few reasons for the rebound in US equity futures this morning. First, European shares are recovering after yesterday’s sell-off. This is reassuring investors that the global economy is not heading for a prolonged downturn. Second, oil prices are stabilizing after yesterday’s sharp decline. This is helping energy stocks rebound. Finally, the strong performance of tech stocks is providing support for the market.
What does this mean for investors?
Investors in the US equity market will be relieved to see that futures are rebounding strongly after a sharp sell-off yesterday. European shares are also recovering, which is providing some support for US equities. The news that the Trump administration is considering tax cuts for businesses and individuals is also helping to boost sentiment.
However, it’s important to remember that there is still a lot of uncertainty in the markets and that volatility is likely to continue in the near-term. So, investors need to be cautious and stay diversified.
Conclusion
The strong rebound in US equity futures and the recovery of European stocks is an encouraging sign that markets may be stabilizing, at least for now. Although it remains to be seen how long this period of stability will last, traders and investors alike can take comfort in the fact that despite uncertainty, some level of normalcy appears to have returned to global markets. As other regions around the world continue to grapple with economic challenges, investors should remain vigilant as they look for opportunities amidst changing market conditions.
