Goldilocks fights back but bears still swinging

World stocks try for third day of gains but Europe subdued

Traders betting on the Goldilocks scenario of a not-too-hot, not-toocold global economy came up against market bears again yesterday, with little sign yet of a winner emerging in their ongoing face-off.

Stocks see-sawn with solid gains in China and other Asian emerging markets offset by a tumble in Japan and then a red morning for most of Europe’s bourses and Wall Street futures in New York.

Tokyo’s 0.65 per cent fall had been compounded as the yen hit a five-month high amid a renewed bout of dollar weakness which had also helped lift bond and commodity markets after recent turbulence.

Copper, one of the industrial metals seen as a sensitive gauge of global economic health, climbed over 1.3 per cent, while Asia’s overnight gains kept MSCI’s 47-country world stocks index up 0.2 per cent despite Europe’s subdued session.

“As long as we don’t get dragged into [a US] recession the market tends to recover quite quickly,” said Donough Kilmurray, Managing Director, Investment Strategy Group at Goldman Sachs, seeing only a 10 per cent chance of that this year.

Still, caution lingered in the broader markets following a US-led tumble in riskier assets last week and ahead of US inflation data today. There were niggling worries too about the trajectory of debt levels after US President Donald Trump on Monday moved back his own deadline for a balanced budget.

World markets’ main ‘fear gauge’, the VIX volatility index was nudging higher again after two days of easing back.