Stocks rally, but for how long?

ANALYSIS | 05/26/2022 15:14:00 GMT

Another relief bounce is underway in equities, but questions linger over how long it can last.

Investors keep on dip buying

“Another attempt at a relief rally is underway across equities, with a fairly substantial bounce across European and US markets coming in the wake of last night’s Fed minutes. While these minutes didn’t really add much to the outlook for monetary policy, they did at least calm fears that a faster pace of tightening is on the way. But beyond bargain hunting there seems little concrete rationale for the bounce, which leaves investors wondering whether next week will see yet another dramatic reversal in stocks.”

Dollar subdued in Thursday trading

“The Fed minutes have stabilised equities, but have put pressure on the greenback in the short-term. Contrary to expectations, the Fed seems content with the current pace of tightening, conscious that a bigger rise in rates increases the chance of a recession. This has helped the euro and sterling to reverse their morning weakness, although the sharply-diverging economic outlooks will reassert themselves in the coming weeks”

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