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Global markets rebounded this afternoon as bargain hunters, dip buyers and other assorted optimists attempted to stem the tide of selling that has so dominated the news since last week. A well-timed move on interest rates by the PBoC helped the mood of European and US markets, although the real test of this development will be when Chinese markets reopen overnight.
At this stage it is foolhardy to try to gauge whether we are at the ‘end of the beginning’ or the ‘beginning of the end’ where this selloff is concerned, but the strong moves higher in UK-listed banks and miners is an indication that there is still an appetite to pick up equities when the opportunity presents itself.
Rational assessment of fundamentals has been rather ignored in recent days, but with a US economy still improving, a rate hike there now a much-reduced prospect and signs of growth in the UK and Europe, buying today may not be the apparently-foolish move that it first appears.
As the market pares back its expectations for a September interest rate move in the US, it will be important to watch Wednesday’s durable goods number. Orders are expected to show slower growth than last month, but a stronger reading could easily unseat the bullish sentiment that returned today. Today might mark the start of a rebound, but there is still much work to be done.