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Markets continue to rally on US stimulus

by LLB Editor
25th Mar 20 9:20 am

After the big surge yesterday there was a steadier feel to this morning’s rally for the FTSE 100 and other European markets.

“That may be a good thing,” says Russ Mould, investment director at AJ Bell.

“In more settled times gains of more than 1% for an index are considered fairly significant. The sort of advances we saw yesterday, with some major markets rising by double digits, while welcome on one level, are also an indication of significant volatility and nervy investors.

“For there to be a sustainable recovery in equities these sorts of wild swings need to settle down. Effectively we need the markets to be more of a tortoise than a hare.

“In the short-term, and after the massive stimulus package agreed in the US overnight, it seems there is little more governments and central banks can do to bolster sentiment, although signs of the co-ordinated response promised by G7 countries might help.

“What we really need to see are signals that the containment measures introduced by many countries are proving effective at stalling the spread of the coronavirus and evidence that China’s exit strategy from its own lockdown is working.

“This could help light the path to a way out of the current economic limbo.”

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