Global stocks pushed higher yesterday as investors, getting over their panic attack triggered by the prospect of a steep rise in US interest rates, tentatively bought back into the market, ensuring solid gains over the week.
Wall Street dipped at the opening of trading after a five-day winning streak that saw it claw back half of the losses it suffered the previous week of turbulent trading, but had turned positive by late morning in New York.
All key European stock markets posted gains at the closing bell.
London’s FTSE 100 closed 0.8% up at 7,294.70 points, Frankfurt’s DAX 30 up 0.9% at 12,451.96 points and Paris’ CAC 40 closed up 1.1% at 5,281.58 points, while the EURO STOXX 50 closed 1.1% up at 3,426.80 points.
Meanwhile, the dollar rebounded after striking a new three-year low against the euro and touching a 15-month low against the yen.
“European stocks are higher today as traders’ levels of optimism rise,” said market analyst David Madden at CMC Markets UK.
“The bullish momentum is growing, and the higher equity markets rise, the more it encourages other investors to jump on the bandwagon.”
Some, however, questioned the assumption that stock markets really were back in full swing, having brushed off last week’s dizzying falls as a one-off correction.
“There is still much debate about whether another bout of volatility is required to properly clear out vested interest from such a period of protracted complacency, and whether equities are still overvalued even after a 10% correction,” said Mike van Dulken, head of research at Accendo markets.
Wall Street closed higher for the fifth straight session on Thursday, with the S&P 500 and Dow Jones Industrial Average both gaining 1.2%.
This week’s rebound follows a sharp drop that sent major indices down more than 10% — considered correction territory.
The shock of the possibility the US Federal Reserve may need to hike interest rates faster than it previously indicated to ward off a possible surge in inflation driven by rising wages may also be wearing off.
“The impressive recovery in equities, particularly US equities, whilst bond yields pace higher, shows that the market is learning to live with the prospect of higher inflation and a potentially more aggressive Federal Reserve,” said analysts at London Capital Group.
In currency trading, the dollar began to rebound in European trading, but not after having struck a new three-year low of $1.2555 against the euro.
Jameel Ahmad, global head of currency strategy and market research at FXTM, said “that the dollar has not been valued this low since traders began to price in the normalisation of US interest rate policy from the Federal Reserve that began in 2015.”


The Euronext logo is seen on the exterior of the Paris Stock Exchange. Paris’ CAC 40 closed up 1.1% at 5,281.58 points yesterday.

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