European stocks rallied on Wednesday, pushed up by a sharp rise in the shares of Just Eat Takeaway after Amazon agreed to take a stake in the company’s Grubhub arm, and by stronger than expected German industrial data.

Europe’s Stoxx 600 index bounced back from steep declines in the previous session to gain 1.8 per cent. Germany’s Dax added 2.1 per cent, while London’s FTSE 100 gained 2.2 per cent.

The Stoxx had closed 2.1 per cent lower on Tuesday, hit by worries about a looming economic slowdown and the possibility of Norwegian gas supplies being curbed by a workers’ strike. Norway’s government intervened late on Tuesday to end the action.

The market moves on Wednesday came as Just Eat Takeaway and Amazon announced a commercial agreement in the US, whereby Amazon agreed to take a 2 per cent stake in Just Eat’s Grubhub business, granting Amazon Prime members access to the food delivery platform. Shares in Just Eat, which has a market capitalisation of €3bn, rose 15 per cent.

Helping to bolster sentiment after the previous day’s sell-off, fresh data showed that German industrial orders unexpectedly rose 0.1 per cent in May following a drop of 2.7 per cent in April. Economists polled by Reuters had forecast a decline of 0.6 per cent.

In Asian equity markets, Hong Kong’s Hang Seng lost 1.8 per cent as new Covid-19 outbreaks compounded recession fears.

US government debt markets were steadier on Wednesday, but yields on two-year and 10-year Treasury bonds remained close after inverting for the third time this year on Tuesday — a reflection of intensifying concerns about slowing growth. So-called inversions, when yields on 10-year Treasury notes slump below those of their shorter-dated counterparts, have preceded every US recession in the past half-decade.

In a further indication of recession fears, the dollar surged to a new 20-year high on Tuesday — as the euro dropped. The dollar index, which measures the US currency against a basket of six others, was flat in early European dealings.

Expectations of an economic slowdown pushed Wall Street’s tech-heavy Nasdaq Composite higher on Tuesday, leading it to close up 1.7 per cent as investors ploughed into companies such as Amazon and Facebook owner Meta which are typically expected to sustain earnings growth during times of market stress.

Aggressive monetary policy tightening has hammered the valuations of tech companies this year, with the prospect of higher interest rates biting into their projected cash flows and earnings.

But, helping those groups, fears of a slowdown have in recent weeks brought down investors’ expectations of how far the US Federal Reserve will raise interest rates. Markets are now pricing in a benchmark rate of 3.3 per cent by February 2023, down from expectations of 3.9 per cent just over three weeks ago.

Futures contracts tracking the US’s S&P 500 added 0.1 per cent on Wednesday morning, while those tracking the Nasdaq 100 rose 0.2 per cent.

In commodities markets, Brent crude rose 2.6 per cent to $105.41 per barrel, after the international oil benchmark fell almost 10 per cent on Tuesday. West Texas Intermediate, the US marker, rose 1.5 per cent, having slipped below $100 on Tuesday for the first time since May.

The pound traded flat against the dollar on Wednesday after Rishi Sunak resigned as UK chancellor on Tuesday and Nadhim Zahawi was appointed as his replacement.

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