European shares rebounded after a five-day decline as bond yields receded and concerns over interest rates subsided. The Stoxx 600 index edged higher, driven by gains in technology and energy companies. US equity futures also increased, while a global equities measure dropped below its 200-day moving average, indicating that stocks may have reached oversold territory. However, the bond market remains crucial in influencing the direction of stocks, currencies, and ultimately the economy.
Derek Halpenny, head of global markets research at MUFG Bank Ltd., emphasized the importance of bond yields, warning that further increases could lead to more substantial declines in equity markets and adversely impact consumer spending, which is a key driver of the US economy. Consumer confidence has already been affected by rising fuel costs due to aggressive rate hikes. Nonetheless, oil prices recovered and climbed above $91 per barrel.
In other news, Senate Democratic and Republican leaders reached an agreement to keep the government open until mid-November and provide $6 billion in assistance to Ukraine. The plan is pending resolution amid gridlock in the House. Key events expected this week include US durable goods data, Eurozone economic and consumer confidence figures, US initial jobless claims and GDP, speeches by Fed Chair Jerome Powell, Eurozone CPI data, and Japan’s employment, industrial production, retail sales, and Tokyo CPI figures.