European stocks rose and U.S. futures gained ground on Tuesday, setting a partial recovery after the worst session in the year amid worries about the lingering COVID-19 pandemic.
The Stoxx Europe 600 SXXP, 0.82% rose 0.9%, following the 2.3% downturn on Monday.
U.S. stock futures ES00, 1.34% also advanced, following the 1.6% downturn for the S&P 500 SPX, 1.29%.
“The prospect of weaker growth ahead thanks to the spread of the delta variant sent a violent shudder through global markets yesterday, which in turn led to one of the biggest risk-off moves in months,” said Jim Reid, a strategist at Deutsche Bank.
“Unlike some previous COVID-related selloffs (or vaccine rallies indeed), there didn’t seem to be a single trigger point behind yesterday’s rout, which instead looked to be the culmination of rising fears that a return to ‘normality’ could be quite a bit further out than many had hoped a few months back,” he added.
“With no clear catalyst to pinpoint for causing this turmoil, maybe this was the result of an overstretched market or maybe this happened due to increasing concerns that the fast-spreading delta variant of the coronavirus will hamper the global economic recovery. Maybe it’s both,” said Charalambos Pissouros, head of research at JFD Group.
He did note that Federal funds futures, even amid the turmoil in the stock market, still are pointing to the first interest rate increase to be delivered during the first quarter of 2023.
In Europe, gainers included Swiss banking giant UBS UBSG, 5.84%, which topped expectations on second-quarter earnings, and metals producers Rio Tinto RIO, 1.91% and BHP Group BHP, 2.56%.
Electrolux ELUX.B, -5.93% shares plunged 10%, as the Swedish appliance maker reported a worse than forecast operating profit and said supply shortages will make it difficult to meet its product mix goals.