The main European stock markets were back in the green Thursday at the close, after starting the day down. Wall Street is also rebounding after the announcement of a less violent contraction than expected in the US economy in 2020. On Wednesday, the US markets had experienced their largest decline since October, won by doubts about the recovery.
After a bout of doubt, the markets have regained their optimism, but the nervousness remains palpable. The New York Stock Exchange opened sharply higher Thursday after the announcement of a less violent contraction than expected in the US economy in 2020. At around 6 p.m., the Dow Jones gained 1.90%, the S & P 500 rose 1.67%, and the Nasdaq by 1.06%.
The day had started badly enough on the European markets, the main stock exchanges having opened lower this Thursday before recovering. Investors particularly welcomed the announcement of a rise in inflation in Germany. The CAC 40 ended on a sharp rebound of + 0.93%, to 5,510.52 points, the day after a decline of 1.16% and the largest fall on Wall Street since October. The DAX ended the day slightly up 0.33%. Only the FTSE 100 remained in negative territory, closing at -0.63%.
Bond yields rise
Sentiment in US markets improved after the release of the first estimate of the fourth quarter gross domestic product, which shows 4% annualized growth, in line with expectations, and a contraction limited to 3.5% on the whole year. At the same time, jobless claims in the United States fell more than expected.
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These figures were greeted by a sharp rise in bond yields, to nearly 1.05% for ten-year Treasury bills.
On Wednesday, the US markets had loosened, disappointed by the results and prospects of Apple, Facebook and Tesla, and made nervous by the comments of the boss of the Fed on an uncertain recovery. The Dow Jones was down 2.05%, the Nasdaq 2.61% and the S&P 500 2.57%, its biggest drop since October 28.
Lots of uncertainty
On Thursday, Apple lost another 2.22% despite the announcement of revenue and profit above consensus for the last three months of 2020, while Tesla (-2.68%) also suffered profit taking after quarterly sales deemed disappointing and in the absence of quantitative forecasts for deliveries for 2021. Facebook, which had lost ground on Wednesday, gained 0.37% around 5 p.m., while American Airlines posted an increase by more than 7%.
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After being weakened by the Fed boss’s pessimistic comments on Wednesday on the economic recovery and won over by concerns about the valuation of tech giants, European markets were also influenced – at the start of the day – by the slowness of vaccination campaigns and related containment measures.
The raging war between individuals and hedge funds, which now exceeds the sole GameStop file, was scrutinized because it has resulted in high volatility. The VIX index had skyrocketed to 37.21 points on Wednesday, its highest point since November. This Thursday in the early evening, it had returned below 26 points, measures having been put in place by brokerage platforms aimed at limiting transactions on companies like GameStop. The latter’s action plunged Thursday at the end of the day by 22% after having given up to 64%. These measures could thus help to strengthen investor confidence.