Markets Report: Retailers boost US, as Italy lifts Europe
Wall Street stocks rose as better-than-estimated earnings at retailers bolstered confidence in the world's largest economy and investors assessed the latest news on trade.
Consumer companies led gains in the S&P 500 Index as solid results from Target Corp and Lowe's defied recession fears. President Trump said yesterday that the economy is strong and the country will "probably" make a deal with China.
Most European bonds fell after Germany saw anaemic demand for a 30-year bond offering a zero coupon, while the pound was once more under the cosh as the possibility of a no-deal Brexit picked up traction.
Traders piled into risk assets after taking a more cautious approach on Tuesday amid a heated debate over the odds of a global slowdown.
President Trump has consistently rejected a growing number of forecasts that his trade war with China and slowing global growth are pitching the US economy toward recession. He has also kept up his relentless attack on the central bank, claiming "the only problem we have is Jay Powell and the Fed".
In European trading, Italian stocks rallied with bonds as investors focused on the prospect of an alternative coalition government. The main index more than recovered Tuesday's losses that followed prime minister Giuseppe Conte's resignation. Italian 10-year bond yields dropped for a second day, hovering just above the 1.31pc level touched Tuesday, the lowest since 2016.
The yield spread over Germany, a key gauge of risk in the nation, was at 200 basis points, and a two-week low. Traders are betting on lower odds of a fresh Italian election in the autumn, while the potential of a new, more market-friendly coalition between the Five Star Movement and the Democratic Party has grown.
There was a broad recovery with all major benchmarks in the region advancing. The Stoxx Europe 600 Index climbed 1.2pc toward its highest level in almost three weeks.
Market participants will be watching the annual Jackson Hole central bank policy meeting for the remainder of the week and hanging on its words for an assessment of how real fears of a recession are.