US Futures, Europe Stocks Regain Ground After Tech-Driven Selloff


Global stocks recouped some of their steep early-week losses Tuesday, with hopes for thawing global trade relations and rallying tech stocks outweighing sliding oil prices.

U.S. stocks were set to claw back some of their losses, with futures pointing to gains of 0.6% for both the S&P 500 and the Dow Jones Industrial Average.

The Stoxx Europe 600 rose 0.5%, buoyed by telecoms stocks, after strong earnings from

Vodafone
.

The benchmark’s oil-and-gas firms were down 1.7%, though, amid a 1.7% drop in Brent crude oil prices to $68.95 a barrel.

Brent was last in bear-market territory, having fallen more than 20% from its early October high, while West Texas Intermediate oil was at its lowest in 11 months—after President Donald Trump tweeted Monday that he hoped OPEC wouldn’t press ahead with a production cut. Mr. Trump said that “oil prices should be much lower based on supply.”

Tech stocks in both the U.S. and Europe were on course for rallies, with

Nvidia

and

Advanced Micro Devices


AMD -9.51%

up 2% and 1.4% in premarket trading, respectively. Tech shares around the globe faced heavy pressure late Monday and early Tuesday, after two

Apple


AAPL -5.04%

suppliers slashed their earnings outlooks, raising concerns about demand for the iPhone.

Shares in Apple plunged 5% Monday, starting a rout which spilled over into Asian trading, with Japan’s Nikkei 225 index falling more than 2%. Other Asian indexes staged partial recoveries, although benchmarks in Taiwan and South Korea still closed 0.6% and 0.4% lower, respectively.

Concerns over souring trade relations between the U.S. and China have also weighed on sentiment for both global growth and the tech sector, although those jitters were soothed Tuesday with the news of the reopening of high-level talks between Beijing and Washington.

Treasury Secretary Steven Mnuchin spoke with Chinese Vice Premier Liu He on Friday about a deal to ease trade tensions ahead of a meeting between President Trump and President Xi Jinping, set for the end of the month at the Group of 20 nations summit in Buenos Aires.

U.S.-China trade tensions, and their potential impact on global economic growth, were key among the factors driving investors to reassess their outlooks during October. Growth stocks and cyclical stocks such as those in banks were among the worst hit by waves of volatility. But a thawing in relations between the countries could soften the blow, analysts said.

“If we get some good news around tariffs investors will quickly cycle back into momentum stocks,” said JJ Kinahan, chief market strategist at TD Ameritrade.

White House plans to broaden the China trade battle to address intellectual property theft may prove to be an obstacle to warmer relations, though.

“What the White House is discussing regarding intellectual property has led to increased fears of what this means for tariffs. We seemed to have some momentum toward a deal everyone might be happy with and this has upset the apple cart a bit,” Mr. Kinahan said.

Elsewhere, investors remained focused on the European political uncertainty that boosted the U.S. dollar to an 18-month high Monday. The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, was down 0.3%, although remained 1% higher over the past five days.

Italian lawmakers were due to respond to European Commission demands for changes to its 2019 budgetary plans, while market participants were weighing U.K. Prime Minister Theresa May’s rejection of the European Union’s latest Brexit proposal.

With the U.S. midterms now in their rearview mirror, investors will now be keeping a closer watch on European risk events, according to Laurence Mutkin, global head of G-10 rates strategy at

BNP Paribas
.

With U.K. and eurozone inflation figures due out later in the week, “we need to see inflation continue to rise, as a downward tilt for the European economy could become more of a worry,” Mr. Mutkin said.

Write to David Hodari at David.Hodari@dowjones.com



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