European stocks open higher 

European stocks are opening higher and Bund yields are moving up from record lows as investors bet the latest risk asset sell-off is overdone.

Tokyo’s Nikkei 225 equity gauge fell 2.2 per cent after Asia inherited news of a torrid session on Wall Street. The Dow Jones on Wednesday had its biggest intraday fall for three years and Treasury yields bounced about like a penny stock as investors used global growth fears as an excuse to exit once-popular trades.

Away from Japan, the equity market reaction in Asia was mixed and more muted – Hong Kong fell 0.6 per cent, Sydney added 0.2 per cent – and in Europe the FTSE Eurofirst 300 is gaining 0.8 per cent as investors note how the S&P 500 in New York finished well off its overnight low.

Index futures suggest the S&P 500, which at one point on Wednesday hit 1,821, will dip 2 points to 1,860 when Thursday’s session begins.

The Wall Street benchmark has dropped 7.4 per cent since closing at its record high just a month ago. The retreat comes before this month’s conclusion to the US Federal Reserve’s third multibillion asset-buying programme and coincides with increased concerns about global growth, sparked by anxiety over the eurozone, emerging deflationary pressures and even the Ebola virus.

“The liquidity crisis many had waited for is unfolding. Theoretically it is an absence of speculators willing to absorb risk,” Sebastian Galy, analyst at Société Générale, wrote in a note to clients.
Investor nervousness spread beyond stocks, creating a market-wide leap in volatility and volume.

“Market action overnight shows that investors are increasingly concerned about a potential slowdown in the US economy through contagion from the rest of the world,” said Dariusz Kowalczyk, analyst at Crédit Agricole, in a note.

The dollar is recovering some ground after the midweek sell-off, which came as a result of traders assuming some poor US retail sales data would discourage the Federal Reserve from raising interest rates by the middle of next year as previously forecast.

 

Source: FT- European stocks open higher

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