U.S. Stock Futures Climb as Investors Return After Brutal Week
Investors welcomed a rare respite from volatility as U.S. stock futures gained after a week that saw two of the biggest single-day percentage drops in seven years. “Futures can move around quite a bit, but what I will be watching for is a stable ‘green’ in the futures coming into tomorrow,” said Walter “Bucky” Hellwig, a Birmingham, Alabama-based senior vice president at BB&T Wealth Management, who helps oversee about $17 billion. “This will show that the S&P didn’t hold on to its 200-day moving average by accident, and this confidence is going to pull more buyers into the market.” March contracts on the S&P 500 rose 1.2 percent at 9:18 a.m. in London, following a weekly decline that at its worst point was the largest since the financial crisis. Futures on the Dow Jones Industrial Average added 1.3 percent, while those on the Nasdaq 100 Index were up 1 percent. The Cboe Volatility Index fell 11 percent, extending its drop to a second day. The gauge known as the VIX more than doubled last Monday, roiling the market for low-volatility products. While market tranquillity has been shattered, few strategists or fund managers said clients were panicking. Instead, people are calling who — while alarmed by the speed of the correction, among the fastest since 1950 — wonder if the selloff is another chance to buy.
U.K. Consumer Spending Slumps Again at the Start of 2018
U.K. consumer spending had its first January decline in five years last month, dealing another blow to the hopes of retailers after an inflation squeeze sapped demand in 2017. According to an index by Visa, spending fell 1.2 percent from a year earlier after falling 1 percent in December. It’s the eighth decline in the last nine months. The figures support the Bank of England’s caution about the outlook for domestic demand in 2018. In its latest forecasts, published last week, it was upbeat about the support from the global economy, but far less optimistic about consumers, given that inflation continues to outpace wage increases. “Household consumption growth is expected to remain relatively subdued, reflecting weak real income growth,” the BOE said.
British House Prices Post First Annual Decline in Six Years
U.K. house prices recorded an annual drop for the first time in almost six years at the start of 2018, with London leading the slump. Values fell 0.4 percent in January compared with a year earlier, according to a report published by Acadata on Monday. Detailed data covering the fourth quarter of 2017 show London down 4.3 percent — the most since the depths of the recession in 2009. “This is the eighth consecutive month in which the annual rate of increase has been declining, and now the dial is in the red zone,” said Peter Williams, Acadata chairman. Despite efforts by the government to help first-time buyers, mortgage approvals fell to the lowest in almost three years in December and there are questions over the strength of demand. There could be further pressure on the market ahead, with some forecasting two Bank of England interest-rate increases in 2018. That would follow a hike in November, the first in a decade. Comparing January to December, U.K. values rose 0.2 percent, the first month-on-month increase since September. That left the average at 301,477 pounds ($416,000). In London, the average is 589,553 pounds.
Asian Stocks Rebound From Tumultuous Week on Positive U.S. Lead
Asian stocks rose Monday, taking a break from the global rout that has gripped investors since late January, after U.S. stocks gained on Friday and S&P 500 Index futures surged in Asia trading hours. Japan is closed for a holiday today. Equities are rebounding after falling as much as 10 percent from their record high on January 29. Investors pared positions amid rising U.S. bond yields, suggesting many remain wary of further increases in global interest rates and inflation. The MSCI Asia Pacific excluding Japan Index advanced 0.6 percent to 557.62 as of 4:44 p.m. in Hong Kong after its biggest weekly fall since September 2011. Most equity benchmarks rose, with South Korea, China and India leading gains. Vietnam’s main gauge surged the most in more than two years, while Australian stocks fell as an inquiry into the country’s financial industry commenced. “Markets have gone from overbought to oversold,” said Joshua Crabb, head of Asian equities at Old Mutual Global Investors AP Ltd. Citigroup Inc. strategists led by Mark Schofield said in a report on Monday that its “too early to call an end to the bull market in equities.” Growth should continue to underpin earnings, the note said.