Global stocks mostly rose on Friday as investors continued to ramp up purchases as equities have stabilized following a bout of volatility earlier in the month.
The Dow finished narrowly positive, up 0.1 percent to 25.219,38, following a choppy session. Despite the muted finale, the week was the sixth straight positive close for the blue-chip index as it notched its best weekly gain since November 2016.
European stocks were broadly higher, while the US dollar rebounded after striking a new three-year low against the euro and touching a 15-month low against the yen.
“European stocks are higher today as traders’ levels of optimism rise,” market analyst David Madden at CMC Markets UK said. “The bullish momentum is growing, and the higher equity markets rise, the more it encourages other investors to jump on the bandwagon.”
Some, however, questioned the assumption stock markets were back in full swing, and had brushed off last week’s dizzying falls as a one-off correction.
“There is still much debate about whether another bout of volatility is required to properly clear out vested interest from such a period of protracted complacency, and whether equities are still overvalued even after a 10 percent correction,” Accendo Markets head of research Mike van Dulken said.
Trading was generally subdued in Asia as many markets, including in Taiwan, China, Hong Kong and South Korea, were closed for the Lunar New Year break. However, Tokyo’s benchmark Nikkei 225 index gained 1.2 percent.
This week’s rebound follows a sharp drop that sent major indices down more than 10 percent — considered correction territory.
“The pace of the correction we saw dictated the pace of the recovery,” Wunderlich Securities chief market strategist Art Hogan said, adding that he expects this year to be much more volatile than the unusually placid last year.
In currency trading, the US dollar began to rebound in European hours, but not until after it struck a new three-year low of US$1.2555 against the euro.
FXTM global head of currency strategy and market research Jameel Ahmad said “the dollar has not been valued this low since traders began to price in the normalization of US interest rate policy from the Federal Reserve that began in 2015.”
He said the prospect of higher yields on US bonds was no longer pulling investors to buy dollars.
“Investors are instead focusing on the development of economies that are within the remit of other central banks,” he said.
Markets expect Britain, the eurozone and Japan will soon begin signaling increases in interest rates, thus making their currencies relatively attractive for investors.
However, Fawad Razaqzada at Forex.com said there were signs on Friday that the US dollar is “on the verge of a comeback.”
In oil markets, US crude oil gained US$0.03 to US$61.37 a barrel in electronic trading on the New York Mercantile Exchange. It rose US$0.74 the day before. Brent crude, used to price international oils, added US$0.11 to US$64.44 a barrel in London.
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