Markets rally after a torrid week

Heading into the close, markets are hanging on to their gains for the day, ending a volatile week on a more positive note.

London skyline
Source: Bloomberg

Major indices are ending the week more or less where they finished the last, a recognition of how this week has seen much heat, but little light where markets are concerned. Janet Yellen’s hint that rates will still rise this year has actually prompted a bout of buying in stock markets, on the calculation that the Fed is more optimistic about the global economy than it hinted in its most recent meeting, and thus valuations are not as overstretched as previously thought.

Such thinking might not last if the round of economic data next week – especially China numbers and US non-farm payrolls – do not match up to estimates, but overall good news is good news once again. 

However, Glencore shareholders are continuing to struggle, as the shares move back below £1 despite an early bounce this morning. After such a fall, bullish sentiment is hard to muster, with those buying in taking the view that the company, once the acquisitive giant of the sector, has now become prey itself, with interested parties watching closely.

The US dollar is running out of steam once again, despite rallying off the lows of the week yesterday thanks to Janet Yellen’s valiant efforts. Evidently the ‘buy the rumour, sell the fact’ crowd are back in action, with the overall dollar index off the highs for the day. As we head into the new week, US non-farm numbers on Friday will be the main event, but a plethora of Fed speeches means that US monetary policy will continue to be the main topic of conversation. 

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