“Investors are keen to buy on what look like some mightily cheap valuations”
Neil Wilson, chief market analyst for Markets.com, said: “The volatility right now is simply staggering, but it does look like investors are keen to buy on what look like some mightily cheap valuations. At some point value will take over from fear, but I’m still not convinced we’re there yet and stabilisation is still a wee bit away.
“European stock markets are on fire as the EU, ECB and German government finally came to the party and told markets that they are ready to be the backstop. The message today from Europe has been clearer, much clearer. Fiscal stimulus on the table. Europe has really rallied round after yesterday’s shock to say they will do ‘whatever it takes’. The clearer messaging from the authorities is supportive of equity markets.
“By lunch, the FTSE MIB was up 15 per cent to claw back most of yesterday’s losses, whilst the Stoxx 600 was up 7 per cent. In London, the FTSE 100 rallied over 7 per cent to test near term resistance on the descending trendline around 5574. 5200 is the hard deck, or perhaps the trap door.”
Most UK equity funds managed to soften Black Thursday blow
Pretty much all major stock markets on significant 2020 loss
Performance of equity indices over 2020 so far
Source: FE Analytics
“Trying to trade around short-term moves is a mug’s game”
Tilney Investment Management Services managing director Jason Hollands said: “While markets are likely to remain volatile in the near term, I’m in no doubt that the impact of the coronavirus on financial markets will be transitory.
“We’ve seen such big day to day swings, up as well as down, trying to trade around short-term moves is a mug’s game. However, for investors focused on the longer-term – whether markets rise or fall next week – at these levels there are clearly opportunities for those able to feed cash in.
“The backdrop of ultra-low interest rates and abundant credit, fiscal stimulus and infrastructure investment ramping up and cheap energy costs are all supportive precursors to the recovery phase that will come once there are signs that the pandemic has peaked. Pinpointing that precise moment is too hard to call and – as we have seen – markets can move very quickly, so gradual buying is a better way to navigate volatile markets.”
Stock markets rise on central bank action
Shares across Europe have opened higher today on the back of a raft of new liquidity measures from central banks, after heavy losses earlier in the week because of the coronavirus pandemic.
As of 09:25, the FTSE 100 index of blue-chip shares was up more than 3 per cent while the Euro Stoxx 600 was also rallying.
Yesterday saw a rout from global equities, with the FTSE 100 dropping 10.9 per cent – its second worst day on record.
The US Federal Reserve stepped into support the market, with a liquidity operation of more than $1trn to help stem the panic caused by the coronavirus outbreak. The Fed and the Bank of England also cut rates recently.
According to the FT, recent liquidity measures announced by global central banks also include Norway reducing interest rates and added liquidity to the market on Friday, Japan buying billions of dollars of government bonds and Australia injecting A$8.8bn ($5.6bn) into the financial system.