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LONDON: Global equities rebounded and silver markets rallied on Monday (February 1) as retail investors expanded their social media-driven battle with Wall Street to take the precious metal to an eight-year high.
Equity markets rocked last week after a surge in retail demand to buy the stocks that hedge funds were betting the most on led to huge gains at companies like GameStop and raised new concerns that monetary support measures and COVID-19 fiscal were fueling a market bubble.
With chat rooms filled with rumors that silver was the new target, stocks, funds, and coins exposed to silver surged, helping to push spot silver up to more than 11 percent, before it earnings will be cut and about 9 percent traded for the last time.
The bullish spirit helped London-listed miners post strong gains, including one of more than 19 percent for Fresnillo.
After falling 3.6 percent last week, its biggest weekly decline in three months, the MSCI All-Country World Index rose 0.5 percent at noon, following overnight gains in Asia.
Wall Street appeared poised for an even stronger recovery, with futures for the S&P 500 and NASDAQ, both rising about 1.2 percent. The VIX “fear gauge” was down 7 percent.
While the retail battle against Wall Street, coordinated on online forums like Reddit, created some systemic risks, the biggest danger was in the tech sector, where some stocks had “dazzling valuations,” Deutsche Bank analyst Jim Reid said.
“Retail has driven such valuations in many places in the past 10 months. If this shows up, the market overall will be in bigger trouble than last week.
However, with corporate earnings still exceeding expectations (about 82% of the S&P 500 provides a positive surprise), Kristina Hooper, director of global market strategy for Invesco, said investors should look at the recent volatility.
“We have to keep in mind that, overall, the fundamentals of the stock market are strong.”
Gold followed silver up 0.8 percent at $ 1,859 an ounce, while oil also followed gains in other commodities, with Brent crude and its US peer up about 1 percent.
While the stock market fight continued to make headlines, analysts warned that the biggest concern was economic momentum as the coronavirus closes bite.
Overnight data showed that Chinese factory activity slowed in January as restrictions hit some regions. In the euro zone, manufacturing growth remained resilient at the beginning of the year, but the pace has slowed since December.
British data showed an even bigger fight, with manufacturers facing the headwinds of COVID-19 and Britain’s exit from the European Union.
While the global launch of the coronavirus vaccine remains slow, with concerns about whether it will work on new COVID strains, Europe was also bolstered by news that it would receive another 9 million doses of AstraZeneca in the first trimester.
The safe-haven dollar rose during the morning session in Europe, with the latest dollar index at 90.876, having rebounded from a low of 89.206 reached in early January.
Meanwhile, the euro extended previous losses against the dollar, falling 0.5 percent to $ 1.2075, well below its recent peak of $ 1.2349, while the pound gave up some of its gains. initials to trade 0.1 percent higher on the day at US $ 1.3705.
With riskier markets rebounding, yields on Italian government bonds fell 2 to 3 basis points on the curve.
Meanwhile, yields on the German Bund, the benchmark for the euro zone, remained anchored at around -0.51% on Monday, following US Treasury yields which were also unchanged.
