FTSE has best day in 4 months but a market rebound looks shaky

European markets signal a drop at open as volatility persists, with the FTSE pointing lower after logging big gains on Wednesday. Nasdaq futures fluctuated from a 1.3% decline to a 0.4% rise following Wednesday's tech sector dip where shares of Super Micro Computer slid over 20% lower. Investors await US weekly jobless claims data.

Equities

The FTSE 100 rose 1.8% on Wednesday, marking its best performance in over four months, buoyed by gains in financial stocks and strong corporate earnings. The mid-cap FTSE 250 also climbed 1%. Among the top performers, HSBC, Lloyds Banking Group, and Barclays saw notable gains, driven by improved global risk appetite following the Bank of Japan's cautious stance on rate hikes.

Wealth manager Quilter surged 4.6% after surpassing half-year earnings forecasts. Inter-dealer broker TP ICAP soared 7.8% on reporting better-than-expected pre-tax profit, leading the FTSE 250. Energy giants Shell and BP benefited from rebounding oil prices, while homebuilders rose 1.5% due to a significant increase in housing prices in July. WPP, however, dropped about 2% after cutting its annual revenue growth outlook and agreeing to sell its controlling stake in FGS Global to KKR for $775 million. Coca-Cola HBC fell 1.5% despite raising its annual operating profit and revenue forecast.

In the US, the Nasdaq ended 1% lower as technology shares declined and weak demand in 10-year Treasury auction unsettled investors. Early gains in tech shares were reversed in afternoon trading, leading to losses across all three major indices. The S&P 500 technology index fell 1.4%, significantly dragging down the benchmark index. The Dow Jones Industrial Average dropped 0.6%, the S&P 500 lost 0.77%, and the Nasdaq Composite fell 1.05%.

Disney shares fell 4.5% after predicting a "moderation in demand" at its theme parks. Super Micro Computer saw a sharp decline of 20.1% after reporting quarterly adjusted gross margins below estimates, while rival Dell Technologies fell 4.9%.

Forex & Commodities

Equities closed lower on Wednesday following a volatile session, with Treasury yields rising after a weak bond auction. The dollar strengthened against the yen, which slumped after Bank of Japan Deputy Governor Shinichi Uchida stated that rate hikes would not occur while financial markets remain unstable. The yen fell 1.75% to 146.83 against the dollar. The dollar index gained 0.2% at 103.19, while the euro dipped slightly to $1.0921.

Oil prices rose sharply, with US crude up 2.77% at $75.23 a barrel and Brent up 2.42% at $78.33, driven by a larger-than-expected draw in US crude stockpiles and potential Middle East supply disruptions. However, in early Thursday trading, oil prices fell again, with Brent down 0.3% to $78.08 and US crude down 0.3% to $75.10.

Gold prices pared earlier gains as the US dollar and Treasury yields edged higher. Spot gold was flat at $2,388.16 per ounce, and US gold futures settled mostly unchanged at $2,432.40. Traders are betting on US interest rate cuts in September, and rising geopolitical tensions in the Middle East are underpinning bullion. Spot silver fell 1.5% to $26.64 per ounce, platinum rose 0.6% to $917.38, and palladium increased 1.1% to $884.00.

US government bond yields rose after the Treasury Department's $42-billion sale of 10-year notes saw weak demand. The yield on benchmark US 10-year notes rose 7 basis points to 3.958%, and the 30-year bond yield increased by 8.1 basis points to 4.2579%. The two-year note yield fell slightly by 0.2 basis points to 3.9827%.