Stock markets have rebounded to an extent today, with the FTSE 100 up 50 points in afternoon trading.
The Dow is attempting to move back above 34,000 after yesterday’s sudden drop, while in London the FTSE 100 is 40 points higher after a small rebound following Tuesday’s sharp fall. Overall however the market still seems in search of a new narrative, and remains all-too-aware that earnings season provides the potential for some more downside as companies find themselves struggling to spin a positive case to justify further appreciation in their stock prices. At least there can be further progress on the EU recovery fund, following the German constitutional court’s decision to allow the fund to proceed, clearing away a major hurdle. There is still a long way to go, but at least another obstacle has been removed and the EU can move further towards its own stimulus programme that will at least partly match the big US efforts.
Gold prices have enjoyed a good month, indeed their best so far this year. The slowdown in the yield rally has proved an immense support, and with inflation concerns still very much at the forefront of everyone’s minds there has been a revival of gold inflows. December’s rally was a false dawn, and even now there is still some hesitation. A recovery above $1800 could well provide a further reinforcement of the bullish near-term view, and spark further inflows into the commodity.
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