Global stock markets rebounded yesterday as investors snapped up bargains after the recent sell-off, encouraged by solid quarterly earnings reports on Wall Street.
After Tokyo recovered from a six-day losing streak and European indices pushed higher, Wall Street was also in positive territory, buoyed by favourable earnings reports from the likes of Wal-Mart and Cisco, traders said.
The day before, global equity markets had dropped, hit by sliding oil prices and doubts over US President Donald Trump’s plans for tax cuts, as well as profit-taking as investors worried that stocks were overvalued.
“Equities are benefiting from a return of risk appetite following a two-week sell-off,” said Accendo Markets analyst, Mike van Dulken.
Nevertheless, Briefing.com analyst Patrick O’Hare cautioned that investor conviction remains weak.
“The typical pattern of late has featured weak opens that then give way to a steady buy-the-dip bid that makes things look better by the close,” O’Hare said.
“In that vein, then, we wouldn’t put it past this fickle market to see a solid open today give way to selling on the strength that makes things look worse by the end of the day.”
At the end of the session in Europe, the Frankfurt and Paris stock markets were each up by more than half a percent.
The gains in London were more modest, dampened by lacklustre UK retail sales data.
London’s FTSE 100 closed 0.2% up at 7,386.94 points, Frankfurt’s DAX 30 finished 0.6% higher at 13,047.22 points, Paris’ CAC 40 ended 0.7% up at 5,336.39 points, while the EURO STOXX 50 gained 0.5% at 3,564.80 points.
“European investors are still focused on buying the dips,” said ETX Capital analyst, Neil Wilson.
“Stocks in Europe have recovered ground.”
While British retail sales rebounded in October from September, they fell on an annual basis for the first time in more than four years, with Britons’ purchasing power weighed down by a combination of high inflation and weak earnings growth.
“We’ve been waiting for the pay squeeze to filter through...
and at first glance today’s numbers aren’t good news on that front,” said Hargreaves Lansdown economist, Ben Brettell.
In commodities trading, oil prices dipped further after plummeting this week when energy watchdog the IEA cut its forecast for crude consumption for next year.
That has been compounded by official data pointing to a rise in US stockpiles and the possibility that an Opec-Russia output cut may not be extended.
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