USA AND EUROPE EQUITY BOUNCED BACK AFTER MONDAY CORRECTION
US stock futures traded sharply higher on Tuesday, following a big sell-off in the previous session as investors moved their focus to the FOMC meeting that will start later in the day and reassessed the impact of potential default by China Evergrande on the financial markets. Meanwhile, travel stocks lifted after the White House said that the US will reopen in November to air travelers who are fully vaccinated against COVID-19 from 33 countries. Also, top Democrats in Congress said that they would aim to continue funding the government and increase its borrowing authority in a single bill in the coming days, averting a potential government shutdown. On Monday, the Dow sank 1.8% to 33,970, its lowest since July 19th, and the S&P 500 and the Nasdaq suffered their biggest daily drops since May.
European shares rose more than 1% on Tuesday, extending early gains and recovering from a sharp decline on Monday that sent major indexes to multi-month lows. Investors welcomed the OECD's economic outlook report showing the Euro Area economy will likely grow 5.3% this year, faster than a 4.3% expansion projected in May. At the same time, travel-related stocks jumped following the relaxation of US travel curbs. Investors also awaited the Federal Reserve's meeting outcome on Wednesday as it is expected to step closer to tapering. On the corporate front, Universal Music Group surged 38% in its first day of trading, giving it a market capitalization of more than €46 billion.
The FTSE 100 rose more than 1% to 6,990 Tuesday, recovering from a two-month low of 6,904 hit on Monday, with heavyweight energy and mining stocks leading the gains. Among single stocks, Royal Dutch Shell jumped 3.9% after it said it would sell its Permian Basin assets to ConocoPhillips for $9.5 billion in cash. Investors await the US Fed's meeting outcome Wednesday and the Bank of England's policy statement Thursday. The Fed will likely signal moves toward scaling back stimulus, while UK policymakers are seen adopting a hawkish tone. Elsewhere, UK Business Secretary Kwasi Kwarteng warned that the country faces a “long, difficult” winter and that some power companies will likely go bankrupt in the coming weeks as gas prices hit new records and as firms seek the government's support to help them handle the costs.
The CAC 40 attempted to bounce back to the 6,500 mark on Tuesday, following two consecutive drops that had sent the main French stock index to its lowest in two months amid growing concerns about spillover risks in the event of a default of China’s 2nd largest property developer and the start of the US Fed 2-day monetary policy meeting. On corporate news, shares of Vivendi’s Universal Music Group soared in its stock market debut during the session, in what was the most anticipated European IPO of the year. The reference price before markets opened stood at €18.5 per share, which jumped more than 35% to €25.05 in the first trading hour.
The FTSE MIB rose more than 1% to around 25,354 on Tuesday, recovering from its biggest fall in two months, as investors tried to shake off the risks of contagion from the Evergrande meltdown, focusing on the US Federal Reserve's two-day policy meeting, where the central bank is expected to lay the groundwork for a tapering. Among single stocks, Italian energy services group Saipem posted the biggest gains after saying it signed an agreement with Saudi Aramco to look into setting up a company to do engineering and construction (E&C) work in Saudi Arabia.
