Futures rally with Europe stocks on stimulus hopes

U.S. futures rallied along with stocks in Europe on Tuesday after Bloomberg reported that the European Union is considering joint bond sales to help counter the fiscal fallout from Russia’s invasion of Ukraine.

U.S. futures rallied along with stocks in Europe on Tuesday after Bloomberg reported that the European Union is considering joint bond sales to counter the fiscal fallout from Russia’s invasion of Ukraine. Bonds dropped and the euro strengthened.

Futures on the S&P 500 and Nasdaq 100 reversed declines to head higher, signaling a firmer U.S. open after Monday’s rout that saw the gauges plunge 3 per cent or more. The Stoxx Europe 600 index rallied more than 1 per cent before trimming the advance, as the possibility of further central-bank stimulus lifted sentiment. Some of the most-battered sectors, including banks, utilities and carmakers, outperformed.

The 10-year Treasury yield jumped along with its German counterpart. The spread between 10-year Italian and German yields -- a key gauge of risk in the euro region -- tightened.

A new round of stimulus would come as welcome relief for a market whipsawed by Russia’s invasion of Ukraine, which sent crude-oil and gas prices soaring, raising concerns about inflation and economic growth. Still, details remain sketchy and the plan has not yet been nailed down, keeping investors on edge and volatility elevated.

“Today’s reaction is perhaps short-term; we need something more solid,” said Jane Foley, head of FX strategy at Rabobank, on Bloomberg television. “The reality is that Europe’s energy security has a massive question mark and there’s a fog, therefore, over the economic outlook for the euro zone.”