Mood mellows following stock market rout
Wall Street shrugged aside early session fears to buy back into riskier assets following Monday’s sell-off in European markets.
Investors had been fretting over growing tensions between Russia and Ukraine and Wednesday’s Federal Reserve meeting which is expected to shed some light on the central bank’s plans for further policy tightening.
But after falling by almost 12% from its 3 January record close, the S&P 500 closed up 0.3%, which was just 8% below its record close. The Nasdaq ended up 0.6%, or 13.6% below its 19 November record after dipping more than 18% below it earlier in the day.
The FTSE 100 index closed 196.98 points (2.63%) lower at 7,297.15 – its biggest one-day fall since the end of November when the emergence of the Omicron variant prompted widespread selling.
The index has now given up all of the gains it made in the opening weeks of this year just as the economy appeared to be battling back from the festive restrictions.
Other stock markets were down by as much as 4% as the stand-off over Ukraine showed no signs of easing. This comes on top of growing expectations that the Federal Reserve may provide some clarity on the first of three or four interest rate rises this year, possibly followed next week by a rate rise by the Bank of England.
Tech firms, which benefit from soaring equity markets, have been hit hard. Edinburgh-based Scottish Mortgage Investment Trust, which owns shares in many of the big US tech stocks, fell 8%.
Bitcoin was a victim of investors fleeing risky assets, also down 8% to below $34,000 — less than half its valuation in November.
Sterling was also in negative territory, last trading down 0.8% on the dollar at $1.34, and weakening 0.52% against the euro to €1.18. while Brent crude was down 1.6% at $86.46 a barrel.
On the upside, Unilever rallied 7.31% following reports that Nelson Peltz’s activist hedge fund Trian had built a stake in the consumer goods maker.
Vodafone Group gained 4.52% following reports that it was looking at buying Three UK, and had also entered talks with rival Iliad to strike a deal to merge their businesses in Italy.