European stocks edged higher following an Asian equity bounce as investors sought to rebuild their confidence amid a muddled political outlook in Southern Europe and an uncertain global trade picture. The dollar fell while the euro climbed, and Italian bond yields declined.
With Italy’s populists battling to revive plans for a coalition government the Stoxx Europe 600 Index rose, even as Spain’s prime minister teetered on the brink and the region braced for potential U.S. tariffs. In Asia, Hong Kong and Chinese stocks outperformed after China’s official factory gauge underscored robust growth despite ongoing trade tensions. S&P 500 futures nudged higher while the yield on 10-year Treasuries rose.
Amid political and trade turbulence, the next focus for traders may well be the U.S. jobs report on Friday, the last one before the Federal Reserve meets next month, when it’s expected to lift interest rates for the seventh time since the end of 2015. Morgan Stanley Chief Executive Officer James Gorman said the Fed is unlikely to be dissuaded from pursuing its path of monetary tightening as a result of recent volatility in financial markets.
Elsewhere, the Indonesian rupiah led a broader emerging- market currency rally after Bank Indonesia raised the benchmark interest rate for a second time in less than two weeks on Wednesday and flagged more increases to counter a selloff in the nation’s currency and bonds.