Against the odds the markets swung positive on Thursday afternoon, as they attempted to claw back some of yesterday’s heavy losses.
There were actually plenty of reasons to suggest the markets should be even deeper in the red than they were on Wednesday.
The US reported its largest one-day increase in covid-19 cases since late April, the WHO warned of a surge of post-lockdown infections in Europe, former Bank of England governor Mervyn King cautioned that the global economy could be facing a coronavirus debt time bomb, and the IMF has highlighted the ‘divergence between the pricing of risk in financial markets and economic prospects’.
And that’s not to mention the worse than forecast jobless claims reading, which came in at 1.48 million against the 1.32 forecast, with last week’s figure also being revised higher to 1.54 million.
Yet, just like the European markets have managed across the session, the Dow Jones has turned a triple digit decline into a 0.1% rise. Not much, but far preferable to the alternative.
The FTSE, slower than its Eurozone peers to turn things around, eventually climbed 0.2%, while the DAX and CAC shot up 0.5% and 0.8% in a remarkable about face from where they were this morning.
It seems that investors aren’t yet ready to heed the IMF’s advice about the gulf between the recent market rally – which has taken its knocks of late, but still leaves indices well above their end of March lows – and the realities of a global recession.
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