Momentum returns to European indices on a bullish Tuesday

A large chunk of last week’s fall has been retaken by equity markets today.

Even with a scare from the Fed, and some disappointing figures about China compiled by HSBC, equity traders have come back into London offices refreshed after a long weekend and eager to make up for lost time. The ‘buy on dip’ mentality is evident, as almost all sectors of the FTSE are higher across the board. With virtually no economic data out today, these markets have been driven upward by the activity of equity traders.

The fundamental strength that equity markets have felt from the global quantitative easing process has continued to propel them. The momentum of trading today could well see equity indices re-testing highs seen earlier this month. Also worth noting is the continuing strength of the dividend yields available on the FTSE, which at just over 3.5% are well above the levels available to those investing in sovereign debt. AstraZeneca, a defensive play, still offers those holding the stock an even more enticing 5.26%. As much as traders might fear the emergence of a bubble and the top of markets, there is still a scarcity of viable alternative asset classes that offer the same reward without a substantial increase in risk.

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