US equity futures edged higher and European stocks rose as global markets regained some composure following a risk-off in Tuesday's session. The dollar extended gains as the euro came under pressure, and Treasury yields stabilized after their spike a day earlier.
Contracts for the S&P 500, Nasdaq, and Dow Jones fluctuated before moving slightly higher alongside the Stoxx Europe 600 index. Earlier, in Asia, equities nudged downward, with shares in Japan and Hong Kong declining, while Australia’s main gauge eked out gains and Korean stocks were little changed.
Italian bonds slumped and the country’s stocks underperformed as populist parties struggling to form a government discussed a potential government debt write-down. The common currency fell for the third day and came under further pressure as German Chancellor Angela Merkel issued a warning on the need for further euro area integration. Peripheral European bonds slid as core notes climbed.
Wednesday’s relative stability in equity markets will be welcomed by many investors, given that fresh uncertainty about the US-North Korea summit is surfacing just as violence flares in Gaza, the IMF warns on the threat protectionism poses to global growth, and Italy stands on the brink of a euro-skeptic government.
Against that backdrop, US Treasury yields, which act as a benchmark for global borrowing costs, have been rising as traders boost bets the Federal Reserve will accelerate monetary tightening. That’s helped drive a dollar rally and sucked cash from some other asset classes.
Elsewhere, emerging-market equities steadied following Tuesday’s plunge, but developing currencies turned lower. The Turkish lira reversed a drop then pared its gain after the central bank said it was monitoring markets and would take necessary steps -- a sign policy makers are getting closer to action to stem a rout. The Malaysian ringgit fell for a sixth day.