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European markets rebounded, with the Italian government saying the country's budget deficit would shrink after next year, while US stocks appeared to be on the brink of rising after optimistic comments by the Federal Reserve.
The Stoxx Europe 600 rose by 0.6% and the Italian FTSE MIB gained 1.4%. European markets were strengthened after the media announced the day after the Italian government was considering reducing its deficit target after next year. Most European indices traded higher, eliminating losses in Asia.
Italian Finance Minister Giovanni Tria confirmed the spending plans on Wednesday, though he refrained from giving precise figures. There will be a progressive reduction of the deficit in the years [following next], He told the manufacturers.
US futures posted a positive opening, with the Dow Jones Industrial Average and the S & P 500 expected to gain 0.3%. It was after that sentiment was reinforced by the comments of the head of the US Federal Bank Jerome Powell, said James Hughes, analyst at Axitrader.
The Fed forecast provided for an exceptionally favorable set of conditions in which the unemployment rate would remain below 4% over the next three years, without the inflation well beyond the Fed's 2% target. . Mr. Powell acknowledged that this perspective was "remarkably positive" and that the United States had not seen such a sustained period since 1950.
The question now is whether the European Union will be satisfied with what Italy says and does about projected deficits, said Mohammed Kazmi, portfolio manager at Geneva's Union Bancaire Privée. "The volatility will remain high until we get the decision from the European Commission and the decisions of the rating agencies [on Italy] it will come later in October, "he said.
Italian markets have been falling since Friday after the government significantly expanded its budget deficit target next year to 2.4% of gross domestic product, creating a likely dispute with the US government. European Union given the proximity of the 3% limit set by the bloc.
Italian 10-year government bond yields, also known as BTPs, declined by 10 basis points to 3.32%, while the 10-year German bond spread narrowed slightly. German markets have been closed.
Italian Prime Minister Giuseppe Conte addresses journalists in front of Chigi Palace in Rome.
Photo:
Andrea Ronchini / Zuma Press
So far, Italy's problems have not spread to the rest of Europe, even though the euro has been under pressure.
"It's not a huge surprise. It's a lot more about Italy [and its debt levels]Said Esty Dwek, senior investment specialist at Natixis Investment Managers.
But Italy adds to Europe's problems, said Ms Dwek. "This is the wall of European anxiety: you have Brexit, you have Italy, then you have Turkey and worries about contagion to European banks."
The Turkish currency slid another 1.2% against the dollar, after inflation rose more than expected to reach 24.5%, its highest level in 15 years.
In the United Kingdom, the shares of the luxury car manufacturer Aston Martin gave up 7.9% in its debut after an IPO in London.
Meanwhile, the Nikkei of Japan closed down 0.7% from its highest level in 27 years, while Hong Kong's Hang Seng closed down 0.1%.
The WSJ Dollar Index, which measures the currency against a basket of 16 peers, rose 0.2% to 90.05.
US Treasury yields rose slightly from 3.065% to 3.084%. Yields evolve in the opposite of prices.
In commodities, gold is down 0.1% at $ 1,205.3 per ounce.
The global benchmark, Brent, rose 0.1% to 84.84 dollars a barrel.
Giovanni Legorano and Emese Bartha contributed to this article.
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