LONDON – Global stock markets bounced higher yesterday following last week’s bloodshed as bargain-buyers moved in, while silver prices soared to an eight-year peak after it became a new target of chatroom-driven retail buying, dealers said.
In Europe, London stocks charged 1.1% higher in afternoon trading while Paris and Frankfurt each jumped 1.4%.
“European stock markets were broadly higher... as investors try to arrest a decline over the last fortnight,” said Markets.com analyst Neil Wilson.
Dealers remain on edge as surging infections and a stuttering vaccination rollout offset long-term hopes for the economic recovery.
Worries about online retail investors’ attack on Wall Street short traders was still causing angst on trading floors, with fears they are being forced to sell some equities to cover their backs.
‘Herding into silver’
Silver, the latest target, zoomed to an eight-year peak at US$30.10 per ounce in early trading, before paring gains.
The precious metal has now soared by more than 16% since Thursday.
“Silver prices jumped...as investor interest turned on the metal due to expectations Reddit traders will attempt to squeeze prices higher,” added Wilson.
“Retail traders are herding into silver in the same way they have driven the likes of GameStop over the last week.”
Patrick J. O'Hare at Briefing.com called the jump in silver prices “the latest sign of the times”.
“We’re talking silver futures, people – or perhaps they would be referred to better today as silly futures,” he added.
Traders have also been rattled by the soaring price of companies chosen by amateur investors who have organised over Reddit and other online forums.
Their huge buying spree of firms led by video game store GameStop and cinema chain AMC has hammered short-selling hedge funds who had bet their price would fall.
Global markets were a sea of red last week due to a combination of issues including rising virus cases, problems with countries’ immunisation programmes and worries about high valuations following a months-long rally.
But this week started on a positive note.
Data out of China at the weekend showed that growth in economic activity appeared to have slowed in January as officials imposed fresh containment measures to counter new virus clusters in parts of the country.
The positive tone on Asian markets carried over to European trading and then into North America, where Wall Street’s main indices opened higher with the Dow climbing 0.9%.
Spotlight on Washington
The spotlight was also still on Washington with lawmakers urged to approve new stimulus for the struggling US economy.
There is a feeling that Joe Biden’s US$1.9 trillion (RM7.69 trillion) plan will be whittled down as Republicans look to lower the cost, while a group of 10 senators from the party have proposed an alternative package they say could win the bipartisan support Biden has said he wants.
Senator Susan Collins, a moderate, said the group would release details of their plan in the coming hours. – AFP, February 2, 2021
