Deciding to take a positive view of the day’s dreadful PMIs, while also benefiting from a statement by the G7, the markets rebounded hard on Tuesday.
The G7’s financial ministers and central bank heads pledged to ‘do whatever is necessary’ to protect, and eventual restart, the international economy, promising cooperation on ‘substantial and complementary packages’ to help out companies struggling in the face of the crisis.
Suggesting that investors are far more receptive to broad-based governmental strategy than pure central bank monetary policy, the Western markets only intensified their gains as the session went on.
Equities have been in the green since the European open, holding strong in the face of a series of far worse than forecast flash services PMIs, the blow cushioned by a run of consistently higher than expected manufacturing readings.
The Dow Jones – which could still be derailed by intransigence regarding the USA’s own stimulus plan – galloped ahead with a near 1600 point surge, rocketing the index back to 20200.
The gains were just as robust in Europe. The FTSE saw its own growth rise from 4% to 6.5%, pushing it across 5300 – remember yesterday it was trading under 5000 – while the DAX added a whopping 9% to lug itself past 9500.
Whether this rebound can be carried into Wednesday is unclear, and is likely dependent on if the Senate can finally agree upon a bipartisan package, one that could run as high as $2.5 trillion according to Nancy Pelosi’s proposal.
"Disclaimer: Spreadex provides an execution only service and the comments above do not constitute (or should not be construed as constituting) investment advice or recommendations, or a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any person placing trades based on their interpretations of the above comments does so entirely at their own risk. Spreadex Ltd is a financial and sports spread betting and sports fixed odds betting firm, which specialises in the personal service and credit area. Founded in 1999, Spreadex is recognised as one of the longest established spread betting firms in the industry with a strong reputation for its high level of customer service and account management.
In relation to spread betting, Spreadex Ltd is authorised and regulated by the Financial Conduct Authority. Spread betting carries a high level of risk to your capital and can result in losses larger than your initial stake/deposit. It may not be suitable for everyone, so please ensure you fully understand the risks involved."