Shares on Wall Street have risen and many Asian and European markets staged a recovery after this week’s global stock market rout, but analysts warned: “We might not be out of the woods.”
The FTSE 100 index in London was 40 points, or 0.5%, up by late afternoon on Tuesday, after losing 166 points, or 2%, on Monday, its biggest one-day points drop in more than a year. Germany’s Dax also rose by 0.5% and France’s Cac went up 0.2%, but the Italian bourse slid by 0.4%.
On Wall Street, the Dow Jones edged up by 1.2% in early trading, while the S&P 500 rose by 1.6% and the Nasdaq climbed 1.5%, after Wall Street’s worst day in almost two years on Monday.
The Nikkei 225 index in Tokyo closed 10.2% higher – up 3,217 to 34,675, a record daily points rise – as investors bought into bargains after the 12.4% rout the previous day that triggered a fall in European and US markets. The Nikkei experienced its biggest drop in 37 years on Monday.
Other markets in Asia also recovered after the rollercoaster ride at the start of the week. South Korea’s Kospi index gained about 3%, while Australia’s ASX200 added 0.4% and the Shanghai and Shenzhen markets in China rose by 0.2% and 0.8% respectively.
Hong Kong’s Hang Seng was among a small number of markets that recorded further modest losses, slipping by 0.3%.
“We might not be out of the woods yet,” said Fawad Razaqzada, a market analyst at City Index, “though conditions could stabilise as the week progresses. With a quieter US economic calendar ahead, there will be fewer new recessionary signals to unsettle traders, and the potential for supportive comments from Federal Reserve officials could ease market pressure.”
The dollar gained 0.6% to 144.75 yen, the first day it has traded higher against the Japanese currency this month. However, the dollar could weaken more broadly in the coming days and weeks amid expectations of a sharper pivot by the US Federal Reserve than previously expected, Razaqzada said.