Where Wall Street goes, other markets follow, and this bounce back from last week’s lows is no different. Traders are quickly getting used to higher bond yields, higher inflation and another round of hikes in global interest rates that will follow, so much so that US stocks are recovering twice as fast as in London.
Markets will remain volatile, for sure, but we’ve just found out that big investors can’t stay out of this market for long, and demand for equities typically picks up in the weeks before tax year-end.
As a measure of strength in this bounce back, stocks added over 50 points despite a weak mining sector another poor set of UK retail sales data. The FTSE 100 (UKX) is currently up 190 points, or 2.7% since last Friday, the biggest weekly increase since December 2016.
An increase in retail sales of just 0.1% in January month-on-month fell short of the 0.6% expected, which followed an ugly 1.5% slump the month before, reflecting further the impact of inflation on disposable incomes. A 1.6% increase year-on-year also missed expectations by miles.
The Bank of England will struggle to hike interest rates without an improvement in consumer spending, but that will come as an anticipated decline in the cost of living feeds through to more significant growth in real wages.
Segro (SGRO) has talked a good fight for years, and it’s delivered again in these strong full-year results. The company has developed more space than ever in the past year, yet demand for its warehouse space, especially among online retailers, still outstrips supply. It helps explain why the vacancy rate has declined again to just 4%, well below the company’s own 5-7% target.
Segro shares are fast approaching recent nine-year highs and trade at a premium to other warehouse developers, but a combination of growth and dividend qualities is attracting further buying interest Friday.
It’s not just equity traders who’ve rediscovered their appetite for risk, cryptocurrencies are also back on the menu. Bitcoin’s spectacular crash from near-$20,000 to just $6,000 in less than two months is seen as a great time to pick up cheap coins.
Regulatory interference is finally being accepted as a sign of maturity and a positive development for this new asset class, rather than a threat.
A move overnight back above $10,000 for the first time in two weeks was brief, however. Seems even crypto investors are happy with a 70% rally in 10 days.
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