Global stocks find feet as bagful of US data to set pre-holiday tone

Stocks recovered some lost ground on Wednesday as crude prices lifted oil companies, but rising Covid-19 cases in Europe, weaker economic sentiment in Germany and a bagful of US data ahead of Thanksgiving were a focus for investors.

The STOXX index of 600 European companies was up 0.4 per cent, recovering from hitting three-week lows on Tuesday due to worries over rising infection rates across mainland Europe leading to lockdowns. Trading around 481 points, the index is still only about 10 points from last week's record high.

"People are struggling to determine whether or not the move down this week was the beginning of a correction, a test lower, or just uncertainty driving flows," said Mike Hewson, chief markets analyst at CMC Markets.

"The big concern is further lockdowns, that is what dominates sentiment, and what would that do for European Central Bank policy," Hewson said.

Germany's Ifo index of business sentiment in November was 96.5, compared with a Reuters consensus forecast of 96.6.

Ifo said the fall in business morale in Europe's biggest economy is a concern, with growth expected to stagnate in the fourth quarter as companies cope with supply chain bottlenecks.

Investors face a welter of data in the United States later in the day ahead of Thursday's Thanksgiving holiday, including the PCE index, an inflation index closely watched by the Federal Reserve.

US inflation has surged to three-decade highs, and the minutes from the Fed's last meeting will also be pored over for clues as to whether the central bank will accelerate tapering of its bond buying stimulus programme when it meets next month.

"There's a risk that the Fed may speed up tapering and that in turn means the timetable for tightening may be brought forward, contributing to the stronger dollar," said currency strategist Sim Moh Siong at Bank of Singapore.

UniCredit bank told clients that investors will be looking to the minutes to see whether divergences between the doves and hawks are growing or not.

Share markets were nervous in Asia as trading was buffeted by a step-up in US Treasury yields as well as volatile oil prices in the face of price-cooling moves by the United States and other nations.

MSCI's broadest index of Asia-Pacific shares outside Japan slipped 0.14 per cent, while Japan's benchmark Nikkei stock price index fell 1.6 per cent as investors returned from a holiday and caught up with global falls the day before.