A shoot out at Los Angeles airport failed to unnerve jittery world markets on Friday, leaving European and Asian bourses to make robust gains that undermined safe-haven government bonds.
The dollar kept up a recent rebound against major currencies, mainly a response to steep losses a week ago. Futures indices, meanwhile, suggested Wall Street stocks would open higher after the July 4 Independence Day holiday.
Many markets were looking towards US job data to be released later in the day for signs of job creation in the world’s largest economy.
The shooting in Los Angeles, in which three people, including the gunman, died near an Israeli El Al airlines counter, was not being judged as the kind of major, market- moving attack that investors had feared over the July 4 holiday.
Heading towards the end of a week that saw bourses plumb five-year depths then burst back towards the surface, European shares opened with a bounce for the second day in a row.
The FTSE Eurotop 300 index of pan-European blue chips was up nearly 2,5%. The narrower DJ Euro Stoxx 50 index added nearly 3,5%.
Analysts said that huge sell off earlier in the week and a curtailed post-holiday Wall Street session would keep things calm.
”We’re likely to see a quiet session after the panic selling earlier in the week,” said Thierry Lacraz, European market strategist at Pictet & Cie, a leading private Swiss bank with $78-billion under management.
Earlier, Tokyo’s key Nikkei average had closed nearly two percent higher amid some relief that the US holiday passed without any major attack.
The Nikkei closed up 1,82% or 193,28 points to 10,826.09. The benchmark had tumbled 1,66 percent on Thursday amid worries about a terrorist attack in the United States.
”That July 4 ended virtually without incident was one reason investors covered short positions,” said Atsushi Tajima, deputy general manager of equities at Koksuai Securities.
BATTERED BONDS
The rebound on stock markets took the wind out of bonds, where investors have been stashing money in a bid for safety, raising yields.
Ten-year euro zone government bond yields rose above five percent for the first time since June 18. The interest rate-sensitive two-year Schatz yield moved above four percent.
US Treasuries were lower in thin post-Independence Day Tokyo trade with key 10-year notes yielding about 4,8%.
The market was looking to the US data for a steer on how the US economy was doing. June non-farm payroll data — a jobs indicator — was due at 1230 GMT.
A Reuters poll forecast is 86 000, compared to a rise of 41 000 recorded in May. A figure above 86 000 would suggest more job creation in the US economy than expected, depressing bond prices.
”Lots of US figures are expected, so there’ll be a better view on direction when the American figures come out,” the London trader said.
On the foreign exchange market, the dollar kept up its recent advance against the euro and the yen after a battering last week that took it near to one-to-one parity with the European currency.
It rose to a 10-day high against the euro and made a limited advance against the Japanese yen, with Japanese Finance Minister Masajuro Shiokawa warning that Tokyo did not want to see the dollar dropping to its lows of last September.
The dollar was trading around at $0,9733 per euro, about 2,5% above last week’s two-year near-parity low.
It was a third of a percent up from late Thursday’s levels, standing at 120,45 yen, more than two yen above last week’s nine-month trough. – Reuters