Global stock markets rallied on Wednesday from a two-year low, as U.S. equities advanced with European and emerging-market stocks to trim their worst quarterly drops in 4 years. The MSCI global gauge of stocks climbed 1.8 percent, paring its quarterly decline to 10 percent. The S&P 500 index gained 1.3 percent in morning trade, while Europe’s Stoxx 600 index climbed 2.4 percent, shaving its quarterly drop to 8.8 percent. The MSCI Emerging Market index rose 2 percent, trimming its loss since the end of June to 19 percent, the most since 2011.
U.S.Treasuries retreated for the first time this week as a global rally in equities reduced demand for safe-haven government debt. The decline pared the largest quarterly gain in 10-year Treasury notes this year, amid a stock market volatility that wiped out nearly $11 trillion in market valuations in the three months. The benchmark 10-year yield increased 3 basis points to 2.08 percent.
High Income Economies
Unemployment in the Euro Area was unchanged at 11 percent in August (sa) compared with the previous month, but slightly lower than the 11.5 percent rate recorded in August 2014. While unemployment fell in Germany, Italy and Spain, among others, it rose significantly in Austria, Belgium, France and Finland. Growth eased in the second quarter, and deflation returned in September with an unexpected 0.1 percent fall in prices (y/y), but indicators on sentiment point to a pick-up in activity.
The current account deficit in the U.K. narrowed more than expected to £16.8bn in the second quarter of 2015, equivalent to about 3.6 percent of GDP and marking the lowest level in two years. Strong export performance shrank the trade deficit to its smallest since 1998.
Lending to private customers in Australia increased by 6.3 percent in August (y/y), the fastest rate since January 2009 and above expectations. Consumers are benefiting from low interest rates, driven the central bank’s record low policy interest rates of 2 percent.
East Asia and the Pacific
Despite a series of negative headlines about the Chinese economy lately, the Westpac MNI China Consumer Sentiment indicator rose to 118.2 in September from 116.5 in August. The latest reading was the fourth consecutive month of increase and the highest level since May 2014.
Latin America and the Caribbean
Brazil's primary budget fell into a deficit of R$7.3bn ($1.3bn) in August from a surplus of R$6.2bn in July. While the figure came in below the R$11bn gap economists had forecast, it was enough to push the government's overall fiscal budget into a deficit for the year.
South African trade gap was recorded at ZAR 9.95 billion in August from an upwardly revised ZAR 1.1 billion shortfall in July, the highest since January, due to lower sales of minerals and higher oil imports.
Central African Republic's interim president, Catherine Samba-Panza, left the United Nations General Assembly in New York early on Monday to return home due to escalating violence in the capital. Three days of intercommunal clashes in Bangui, a city secured by U.N. and French peacekeepers, has sparked fears that Samba-Panza could be overthrown.