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World stock markets bounce back after turbulent week World stock markets bounce back after turbulent week
(about 3 hours later)
European and Asian stock markets have bounced back at the end of a tumultuous week, as oil prices recovered and the European Central Bank president, Mario Draghi, raised hopes of further stimulus measures. Global stock markets have bounced back at the end of a tumultuous week, as oil prices recovered and the European Central Bank president, Mario Draghi, raised hopes of further stimulus measures.
It was a week that involved panic selling in global markets, pushing several of them, including London and Japan, into bear market territory, as oil prices tumbled to 13-year lows below $28 a barrel and further intensified fears over the health of the global economy.It was a week that involved panic selling in global markets, pushing several of them, including London and Japan, into bear market territory, as oil prices tumbled to 13-year lows below $28 a barrel and further intensified fears over the health of the global economy.
Related: ECB stimulus hint steadies marketsRelated: ECB stimulus hint steadies markets
On Friday, however, Japan’s Nikkei rallied nearly 6%, its biggest one-day gain in four and a half months, helped by a weaker yen and speculation that the Bank of Japan could unveil new stimulus measures at its meeting next week. On Friday, however, European markets rebounded, following a heavy hint from Draghi that the ECB was ready to inject fresh stimulus into the eurozone at the March meeting – sooner than many investors expected.
In Europe, Draghi hinted that the ECB was ready to inject fresh stimulus into the eurozone at the March meeting – sooner than many investors had been expecting. The comments pulled European markets off their lows on Thursday afternoon and gave them a further boost on Friday. By the afternoon, the FTSE 100 index in London was nearly 130 points, or 2.2%, up at 5901.33. Germany’s Dax rose 2.3%, France’s CAC added 3.5%, Spain’s Ibex advanced 3.6% 2% and Italy’s FTSE MiB was up 2.5%.
The comments pulled European markets off their lows on Thursday afternoon, and gave them a further boost on Friday, with the FTSE 100 index in London gaining nearly 100 points, or 1.7%, to 5872.74 in early trading. Germany’s Dax and France’s CAC were both up 1.8% and Spain’s Ibex rose 2%. Wall Street also got off to a good start, with the Dow Jones rising nearly 200 points, or 1.2%, to 16,071.15. The Nasdaq added 1.9% to 4220.91.
In Asia, the Nikkei in Tokyo rallied nearly 6%, its biggest one-day gain in four and a half months, helped by a weaker yen and speculation that the Bank of Japan could unveil new stimulus measures at its meeting next week.
Michael Hewson, chief market analyst at CMC Markets UK, said: “There now remains the very real possibility that we could well finish the week in positive territory, and if that happens it would be a remarkable turnaround after Wednesday’s carnage.”Michael Hewson, chief market analyst at CMC Markets UK, said: “There now remains the very real possibility that we could well finish the week in positive territory, and if that happens it would be a remarkable turnaround after Wednesday’s carnage.”
Brent crude rebounded more than 5%, rising to $30.81 a barrel, helped by comments from Saudi Arabia, the world’s top oil producer. US crude rose 3.6% to $30.58 a barrel. Khalid al-Falih, the chairman of state-owned oil company Aramco, said at the World Economic Forum in Davos that current prices were “irrational”. Brent crude rebounded more than 7.5%, adding $2.13 to $31.43 a barrel, helped by comments from Saudi Arabia, the world’s top oil producer. Khalid al-Falih, the chairman of state-owned oil company Aramco, said at the World Economic Forum in Davos that current prices were “irrational”.
He told an energy panel: “The market has overshot on the low side and it is inevitable that it will start turning up. I bet at the end of the year it will be higher than where we are now.” However, he also added, “short term it is a very bleak picture”.He told an energy panel: “The market has overshot on the low side and it is inevitable that it will start turning up. I bet at the end of the year it will be higher than where we are now.” However, he also added, “short term it is a very bleak picture”.
The Nikkei closed 5.9% higher at 16,958.53, recouping most of the heavy losses experienced over the past two days. However, it was still down 1.1% over the week, the third week running that the index has fallen.The Nikkei closed 5.9% higher at 16,958.53, recouping most of the heavy losses experienced over the past two days. However, it was still down 1.1% over the week, the third week running that the index has fallen.
Traders said international investors such as hedge funds and oil funds were buying shares again, but warned that it was too early to call the bottom of the market.Traders said international investors such as hedge funds and oil funds were buying shares again, but warned that it was too early to call the bottom of the market.
All major markets in Asia Pacific joined in the rally, with Hong Kong’s Hang Seng index gaining 3.2% and the Straits Times in Singapore rising 2.3%. Australia’s stock market closed 1.1% higher.All major markets in Asia Pacific joined in the rally, with Hong Kong’s Hang Seng index gaining 3.2% and the Straits Times in Singapore rising 2.3%. Australia’s stock market closed 1.1% higher.
In China, the benchmark Shanghai Composite index rose 1.2% on Friday and ended the week slightly higher than it began for the first time this year, edging up 0.5%. The CSI 300 index of the largest listed companies in Shanghai and Shenzhen closed up 1%, leaving it down 0.2% over the week.In China, the benchmark Shanghai Composite index rose 1.2% on Friday and ended the week slightly higher than it began for the first time this year, edging up 0.5%. The CSI 300 index of the largest listed companies in Shanghai and Shenzhen closed up 1%, leaving it down 0.2% over the week.
The Chinese vice-president, Li Yuanchao, sought to reassure investors that Beijing would act to prevent volatility in a market that was “not yet mature”.The Chinese vice-president, Li Yuanchao, sought to reassure investors that Beijing would act to prevent volatility in a market that was “not yet mature”.
“An excessively fluctuating market is a market of speculation where only the few will gain the most benefit when most people suffer,” Li told Bloomberg in Davos.“An excessively fluctuating market is a market of speculation where only the few will gain the most benefit when most people suffer,” Li told Bloomberg in Davos.
China’s labour ministry aired some good news, announcing that urban unemployment remained unchanged at 4.05%, well below the government’s target, and predicted that the job market would remain stable this year. However, most economists believe China’s real jobless rate is far higher.China’s labour ministry aired some good news, announcing that urban unemployment remained unchanged at 4.05%, well below the government’s target, and predicted that the job market would remain stable this year. However, most economists believe China’s real jobless rate is far higher.
Concerns about a further devaluation of the yuan in the near term have also faded.Concerns about a further devaluation of the yuan in the near term have also faded.