European stocks edged up from steep losses while Asian shares tumbled on Monday, just days before the Federal Reserve is expected to raise benchmark interest rates for the first time in nearly a decade.
Ultralow oil prices and trouble in the high-yield bond market on Friday intensified worries about risky assets, sending the S&P 500 to its worst daily performance since September and worst weekly decline since August.
The Stoxx Europe 600 was up 0.6% in early trade after falling 2% on Friday and losing 4% for the week.
Asian shares mostly dropped during trading on Monday, catching up with Friday’s losses on Wall Street. Japan’s Nikkei Stock Average was down 1.8%, Australia’s S&P/ASX 200 down 2% and Hong Kong’s Hang Seng Index lost 0.7%.
The Shanghai Composite Index bucked the trend, rising 2.5% after Chinese authorities reported over the weekend that industrial output rose by more than economists had expected in November.
“The economic data over the weekend has done the trick in terms of boosting sentiment on Chinese markets, without it being so strong as to damage hopes of more easing further down the line,” said Chris Beauchamp, analyst at IG.
In commodities, Brent crude was down 0.4% at $38.18 a barrel after industry watchdog International Energy Agency warned that global crude demand will decline next year.
Gold was down 0.5% at $1,070 an ounce.
In currencies, China’s yuan hit its weakest level against the dollar since 2011 after the People’s Bank of China guided the currency lower and published an editorial saying the yuan’s exchange rate would be better measured against a basket of currencies rather than the dollar alone.
The euro was down 0.3% against the dollar at $1.0961 ahead of eurozone industrial output data, while the dollar was up 0.2% against the yen at ¥121.25.
Monday’s moves followed an extremely volatile day for markets on Friday, when U.S. crude fell below $36 a barrel, sending energy shares plummeting.
Adding to the pressure, junk-bond prices posted their largest drop since 2011 in record trading volume. The CBOE Volatility Index, a measure of anticipated future swings in the S&P 500, hit its highest level since late September, and the 10-year U.S. Treasury note traded at 2.14%, its lowest yield since Oct. 28.
The sharp losses and swings in markets worry some investors as the Fed is widely expected to raise interest rates from ultralow levels at its Dec. 15-16 meeting. Given the relative certainty around a rate rise, investors have shifted their focus to the central bank’s comments on the pace of rate increases for 2016.