U.S. index futures rallied as Japanese stocks soared the most since 2008 amid speculation a selloff that brought global equities into a bear market has gone too far.
Contracts on the Standard & Poor’s 500 Index due in March jumped 0.9 percent to 1,874.75 as of 1:45 p.m. in Tokyo. Japan’s Topix soared more than 7 percent, China’s yuan jumped by the most since a dollar peg ended in 2005, while the yen dropped with gold as haven assets fell out of favor.
“Japan is massively oversold,” said Andrew Clarke, Hong Kong-based director of trading at Mirabaud Asia Ltd. “Everyone is scrambling to get back in. Long-only investors are coming in along with retail and hedge funds. Plus, I would say there’s a lot of short covering going on. Also, U.S. shares rallied and we have China’s market back on today.”
Equities around the world are rallying after an MSCI gauge of global equities capped a 20 percent slide from a May record last week. The U.S. Federal Reserve acknowledged the volatility around the world and signaled it may delay further monetary tightening. China’s central bank stepped up efforts to restore stability to the nation’s currency and economy, with Governor Zhou Xiaochuan saying there’s no basis for continued yuan depreciation.
Japan’s Topix surged 7.3 percent, the most since October 2008, after a bigger-than-expected decline in fourth-quarter gross domestic product spurred speculation the central bank will boost stimulus. Financial markets in the U.S. and Canada are closed Monday for holidays.
The global rally started Friday with U.S. stocks halting a five-day decline, its longest losing streak since September, as crude prices rebounded and data showed retail sales increased for a third month in January. The S&P 500 rose 2 percent while the Stoxx Europe 600 jumped 2.9 percent.