Gulf Times - Gulf Times Business
World’s stock markets bid rebound from rout
Global stock markets attempted to rebound yesterday, one day after ferocious losses sparked by heightened economic concerns, notably over rising US interest rates that have drawn attacks from President Donald Trump on his “crazy” central bank.
Wall Street stocks snapped higher at the opening bell, trying to recover from a two-day 1,300-point bloodbath that left it the lowest levels in months.
In late morning trading, the Dow was up 0.9%.
The broader S&P 500 climbed 1.2% and the tech-heavy Nasdaq Composite pushed 1.9% higher.
Asia enjoyed healthy gains, with star performer Hong Kong surging 2.1%, Shanghai up 0.9% and Tokyo adding 0.5%, at the end of a traumatic week for investors worldwide.
Europe initially chased Asia higher, but gave up gains as the closing bell approached.
London and Paris ended the day down 0.2% at 6,995.91 points and 5,095.98 points respectively, while Frankfurt gave up 0.1% at 11,523.81 points. The EURO STOXX 50 closed 0.5% down at 3,194.85 points.
The dollar recovered versus the euro and pound, while oil futures bounced back.
“US stocks are recovering solidly in early action from the past two sessions of drops that have come from the festering concerns regarding the pace of the recent rally in Treasury yields that spilled over to the global markets,” said analysts at Charles Schwab brokerage.
Still the rebound was only partial, as the Dow was down 5% for the week after trading closed on Thursday.
“The brutal selloff that engulfed global stocks this week took a pause on Friday as risk sentiment slightly improved across financial markets,” noted analyst Lukman Otunuga at trading firm FXTM.
In the event US banks Citigroup, JP Morgan and Wells Fargo reported higher third-quarter earnings yesterday, reflecting the benefits of higher interest rates for the financial sector.
Shares in Citigroup and Wells Fargo both rose, while those in JP Morgan slid in morning trading.
Yesterday’s fightback followed two days that have seen something approaching panic in global equity markets, as investors took fright in the face of rising US interest rates and an intensifying trade war between Washington and Beijing.
The global sell-off was also due in part to Trump describing the policies of the US Federal Reserve as “loco” and “crazy”, sparking concerns over the independence of the world’s top central bank.
But US Treasury Secretary Steven Mnuchin yesterday downplayed the stocks plunge in Wall Street, saying it was “just a natural correction”, in an interview on CNBC.
Separately yesterday, oil prices rebounded from sharp losses a day earlier — but gains were tempered after the International Energy Agency watchdog trimmed its global crude demand growth forecasts for 2018 and 2019.