U.S. equity futures climbed, signaling the S&P 500 Index may advance for the first time since the Brexit vote, as optimism grew that policy makers will move to support financial markets.
Contracts on the S&P 500 expiring in September jumped 0.8 percent to 2,001.50 at 12:32 a.m. in New York, after the underlying index tumbled 1.8 percent on Monday. More than $974 billion has been erased from S&P 500 stock values in the past two days, the third-most in history, according to data compiled by S&P Dow Jones Indices.
Equity futures are indicating an easing of pressure after the pound strengthened for the first time in three days and Asian shares erased early losses. A meeting with the Bank of Japan and government officials fueled stimulus speculation while the Nikkei 225 Stock Average’s brief drop below 15,000 spurred buying.
“We are probably going to have looser policy settings than before the vote,” Tim Schroeders, a Melbourne-based portfolio manager at Pengana Capital Ltd., who helps oversee about $1.2 billion in assets, said by phone. “You’d have to suspect that the bias is to the downside for global growth and as a result that stimulus remains in light of increased uncertainty.”
Investors are watching closely for signs that central banks will help to ease the market turmoil. Japan Finance Minister Taro Aso told reporters after a meeting of top economic officials that nervous moves are continuing. Prime Minister Shinzo Abe said he wants his finance minister and the central bank governor to watch markets more closely.
Risk assets have been under pressure since Britons voted to secede from the EU, raising concerns that an already-fragile global economic recovery will falter as trade snarls in one of the world’s biggest consumer blocs. The vote left investors around the world scurrying toward safe havens for a second session after the S&P 500 on Friday fell 3.6 percent to erase its advance for the year.
Friday’s losses reversed a weekly advance in the S&P 500 and pushed the CBOE Volatility Index up 49 percent. The measure of market turmoil known as the VIX fell 7.4 percent Monday to 23.85, even as stocks continued to drop.