Markets rebound on stimulus hopes

“Investors have used the weekend to contemplate last week’s global markets sell-off. The time for reflection seems to have switched the mood from a state of manic to a sense of calm, as illustrated by markets starting to move up on Monday.

“The FTSE 100 rallied by 2.7% to 6,758 on a mixture of bargain hunting and, perhaps more importantly, on hopes of major stimulus from central banks. Markets typically rise on interest rate cuts.

“The Bank of England, Bank of Japan and Federal Reserve have all indicated a willingness to provide support, implying coordinated action from central banks.

“There is a semi-reversal of last week’s sector trends with healthcare and infrastructure-related stocks no longer in favour and heavily sold-off industrial and mining stocks leading the charge upwards.

“However, airlines were still in the doldrums with International Consolidated Airlines falling 6% and EasyJet down 1.4%.

“The big question is whether a single day’s rebound is enough to repair damaged investor sentiment or if this is simply a dead cat bounce before fears take over again.

“It wouldn’t be surprising to see fund managers with spare cash take advantage of the market sell-off and buy companies for a discount.

“European and Asian markets rallied, albeit by a smaller amount than the UK. Oil prices joined the party with a 4.6% rise in Brent Crude to $51.94 per barrel.

“Interestingly gold prices remained in favour despite the rebound in equities, with the precious metal rising 1% to $1,602 per ounce,” says Russ Mould, Investment Director at AJ Bell.

These articles are for information purposes only and are not a personal recommendation or advice.