Global stocks bounce as Italy dodges rating downgrade

China data underscores worries of economic cooling as industrial profit growth slows

European shares climbed and Wall Street was set for a stronger opening yesterday thanks to a surge in autos stocks and relief that Italy dodged a ratings downgrade.

Europe’s autos sector jumped 4.9 per cent, set for its strongest day since August 2015, after a report that China was considering halving the tax on car purchases in an attempt to boost demand for autos, which has been hurt by a trade war and slowing economic growth.

US stocks rose early yesterday, bouncing from multimonth lows following a big IBM acquisition. About 12 minutes into trading, the Dow Jones Industrial Average was up 0.8 per cent at 24,875.68.

Germany’s DAX jumped 2.1 per cent by 1310 GMT, boosted by carmakers BMW, Daimler and Volkswagen, while the leading index of Eurozone stocks rose 1.5 per cent.

Italy’s FTSE MIB led the market with a 2.4 per cent gain after Italian bond yields fell sharply to a one-week low following Standard & Poor’s decision to leave Italy’s sovereign rating unchanged, prompting relief there was no ratings downgrade.

This also pushed Italian bank stocks up as much as 4.5 per cent, set for their strongest day since September 10.

Strong gains across Europe helped boost US stock futures back into the positive, with the Nasdaq futures up 1.4 per cent, S&P 500 futures up 1.1 per cent and Dow Jones futures up 0.7 per cent.

MSCI gains

The MSCI world equity index, tracking shares in 47 countries, extended early gains to rise 0.4 per cent.

The index is down 9.3 per cent so far this month and has shed $6.7 trillion (Dh24.6 trillion) in market capitalisation since its January peak.

Chinese data underscored worries of a cooling economy as profit growth at its industrial firms slowed for the fifth consecutive month in September due to ebbing sales of raw materials and manufactured goods.