Stock markets across Europe rose on the market opening of 16 February, with the FTSE100 rising by 0.71 per cent in early afternoon. As at 2pm the German Dax was up by 0.51 per cent, France’s Cac had risen 0.95 per cent and the pan-European Stoxx 600 was showing a gain of 0.78 per cent.
Over the past week global markets have been largely buoyant, having shaken-off last week’s sell-off.
These strong openings are part of a seeming recovery of markets across the world after last weeks sell-off. While most market indices are still below their peaks in January, the past week has seen major start to regain ground.
Down by over 8 per cent from its January highs at one point, the FTSE 100 has, since bottoming out at 9 February, rebounded by over 2 per cent. Similarly, the FTSE All-Share index fell by over 8 per cent from its 12 January high, since recovering by over 2.5 per cent since 9 February.
A recovery in Japan’s Nikkei 225 has taken slightly longer. The index reached a high of 24,124 on 23 January, reaching a low of 21,145 on 14 February – a fall of over 12 per cent. Since, however it has started to rebound, advancing by nearly 3 per cent from last week’s lows.
Likewise, Hong Kong’s market took slightly longer to rebound. After falling by 11.14 per cent between its peak on 26 January and 12 February, it has since gained nearly 4 per cent.
The Dow Jones index staged a recovery much earlier. After dropping over 1000 points on two separate days of trading (and falling by over 10 per cent in total between 26 January and 8 February), it has since seen an impressive recovery. Between 8 February and 15 February, it has risen by over 5 per cent.
Similarly, the S&P 500 has also risen by over 4.5 per cent between those dates, falling a 10 per cent fall from its January highs. Yesterday (15 February) marked the fifth day in a row US stocks had risen since last week’s sell-off.
The jitters over inflation in the US (leading many investors to fear that monetary policy would start to tighten much quicker than expected), appear to have now subsided. However, despite the pull-back in prices, US and global equities still remain, by historic standards, expensive.
Whether or not last week’s correction will be followed by another sustained bull run or is a taste of more to come is impossible to tell. The sell-off was more to do with sentiment and expectation than actual macroeconomic concerns (US hourly earning increases notwithstanding). Global economic growth is at its strongest and broadest for years. Of course, as ever, it is often ‘unknown unknowns’ that tip markets into sell territory.
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