Stocks bounce back from yesterday’s bloodbath

Equity markets are higher this morning after the massive collapse witnessed yesterday.

The comments from the Federal Reserve on Wednesday night triggered a plunge in global equity markets yesterday, including the largest one-day drop in the FTSE 100 since September 2011. However, this morning traders have picked themselves up and dusted themselves off. Investors are not overly bullish, but we have seen a bit of bargain-hunting and short-covering which has nudged stocks higher.

There is a new twist in the concern about China; originally the worry was that their economy was slowing down due to their manufacturing sector being in contraction; however investors are now worried about their credit market. China has been going through a credit boom and their interbank lending rate spiked last night. This spooked investors as it reminded them of the credit crunch that brought down a number of banks in 2008.

We are not expecting any major economic announcements from Europe or the US today, and it is likely that volatility and trading volumes will remain low for the rest of the day.

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