Stock markets recovered worldwide after one of the most volatile quarters since 2011. Shares climbed on Wednesday as a number of sectors that have suffered large-scale losses over the last three months, including energy, materials and health-care, proved to be the best performers of the trading session. Investors are now focused on Friday’s nonfarm payroll report and the next quarter officially beginning in mid-October. Top analysts note that the year’s third quarter would have to include very strong earnings in order to show that the U.S. economy is indeed growing. The Dow Jones Industrial Average added 235.57 points, or 1.5%, to trade at 16,284.7. The Standard and Poor’s 500 Index rose 35.94 points, or 1.91%, to trade at 1,920.03 while the Nasdaq Composite stood out with a 102.84-point gain (2.28%) to trade at 4,620.16. Despite Wednesday’s positive results, the S&P 500 is still down 6.9% in the third quarter while all three major U.S. benchmarks posted their worst quarterly results in nearly four years. Friday’s nonfarm payroll report will offer some insight into employment in the U.S. Forecasters are expecting an addition of around 200,000 jobs in similar fashion to previous reports, as well as an unemployment rate of 5.1%. According to the Federal Reserve, employment data is key in determining the right timing of an interest rate hike, making the report a central event in the week’s economic calendar. The next key event will be third quarter earning reports. According to FactSet’s forecasts, the S&P is likely to show a 4.9% decline in earnings for the third quarter and a 3.4% decline in revenue.
Asian and European benchmarks also showed strength on Wednesday. The Europe STOXX 600 rose 2.5% after one of its worst quarters in recent years. Gains were led by the turbulent mining and auto sectors as Glencore (LONDON:GLEN) gains more than 14% one day after dismissing concerns that the mining giant may be facing bankruptcy. The British FTSE 100 added 2.2%, the German DAX 30 gained 2.6% and the French CAC 40 rose 2.6%. The DAX is down nearly 12% for the quarter. Asian markets rallied, as the Japanese Nikkei 225 added 2.7% after suffering heavy losses in the previous trading session. The Japanese benchmark has declined 14% over the last quarter after a five-quarter gain streak. The Chinese Shanghai Composite rose 0.5% after a 29% quarterly loss that marked the benchmarks worst quarter since 2008. The markets continue to be unnerved at the prospect of a slowdown in Chinese economic growth as well as the Federal Reserve’s next rate hike.
Chinese and Japanese manufacturing data will be released later today. However, the week’s major focus will be on Friday’s Japanese unemployment and U.S. nonfarm payrolls data.