Stocks came back with a vengeance amid speculation losses that sent global equities into a bear market had gone too far, with rallies in crude oil and the Chinese yuan burnishing sentiment.
Shares in Europe capped their biggest two-day gain in more than four years and Japan’s Topix index soared the most since 2008, with markets in North America closed for a holiday. Developing-nation equities rebounded from their worst weekly drop in a month, as oil built on Friday’s surge.
The yuan strengthened the most since a dollar peg was scrapped in 2005 after People’s Bank of China Governor Zhou Xiaochuan talked up the credentials of the world’s second-largest economy. Demand for haven assets such as gold and the yen waned, while nickel climbed the most in two months amid the yuan rally.
Chinese markets returned Monday from a week-long holiday, during which a gauge of global stocks capped a 20 percent slide from its May record and anxiety over the ability of central banks to quell the volatility intensified.
Governor Zhou front-footed the market, making rare comments at the weekend on the health of the Chinese economy and asserting the stability of the local currency. Shanghai shares pared a drop of 3 percent, even as China reported a record trade surplus amid slumping imports and exports.
“The Chinese market didn’t react as bad as we feared and with the weak export data there is some big hope that the central banks will react quite fast,” said John Plassard, senior equity-sales trader at Mirabaud Securities LLP in Geneva. “It’s a mix of hope of intervention from the Asian central bank, short squeeze and also a relief in some energy and banking sectors, the most shorted sectors.”
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