(Bloomberg) -- US equity futures advanced with government bonds, signaling a potential recovery at the end of a tumultuous week in markets.
S&P 500 futures rose with those on the Nasdaq 100 as the 10-year Treasury yield tumbled 10 basis points, providing respite to the tech-heavy and duration-laced benchmark. Government bonds rallied across Europe and the dollar strengthened after reversing an earlier loss.
Another bruising session on Wall Street Thursday took the S&P 500 down 2% to the lowest in almost two years and the Nasdaq 100 tumbling almost 4%. The S&P 500 Index is headed for its third straight quarter of losses for the first time since 2008-2009 and the Nasdaq 100 Stock Index for the first time in 20 years.
"Today, everything is just oversold so you are seeing a rebound," said Esty Dwek, chief investment officer at Flowbank SA. "We are closer to bottoms and sentiment is so negative the downside is becoming more limited."
Fears of global recession are mounting as the threat of higher rates saps growth. The case of the UK shows how faultlines between government and central bank policy on tackling inflation can erupt into a crisis. Hopes evaporated that the British government would succumb to pressure to back down from tax cuts that brough the pound to the edge of dollar parity.
The pound renewed its tumble as it emerged the UK Treasury hasn't asked its fiscal watchdog to accelerate its economic forecast, suggesting that the government has no plans to backtrack on the economic strategy roiling markets.
Read more: UK Treasury Hasn't Sought to Speed Up Budget Watchdog's Forecast
Now traders are gauging the next pressure points that will further erode gains won by the Bank of England's billions in bond-market buying in the past two days.
Global equity funds garnered inflows of $7.6 billion in the week to Sept. 28, according to data compiled by EPFR Global. Bonds had $13.7 billion of outflows in the week, while $8.9 billion flowed into US stocks, the data showed.
In the premarket, Nike Inc. plunged 10% after the sportswear giant was forced to push through margin-busting discounts that hurt profitability. Micron Technology Inc. shares rose after analysts said the ongoing inventory correction was only a short-term hurdle.
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Key events this week:
- Euro zone CPI, unemployment, Friday
- US consumer income , University of Michigan consumer sentiment, Friday
- Fed's Lael Brainard and John Williams speak, Friday
Some of the main moves in markets:
Stocks
- Futures on the S&P 500 rose 0.4% as of 7:05 a.m. New York time
- Futures on the Nasdaq 100 rose 0.3%
- Futures on the Dow Jones Industrial Average rose 0.3%
- The Stoxx Europe 600 rose 0.7%
- The MSCI World index was little changed
Currencies
- The Bloomberg Dollar Spot Index rose 0.2%
- The euro fell 0.6% to $0.9755
- The British pound fell 0.5% to $1.1056
- The Japanese yen was little changed at 144.49 per dollar
Cryptocurrencies
- Bitcoin fell 0.2% to $19,473.01
- Ether was little changed at $1,336.96
Bonds
- The yield on 10-year Treasuries declined 10 basis points to 3.69%
- Germany's 10-year yield declined 11 basis points to 2.07%
- Britain's 10-year yield declined 10 basis points to 4.04%
Commodities
- West Texas Intermediate crude rose 0.5% to $81.63 a barrel
- Gold futures rose 0.3% to $1,673.70 an ounce
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