Global shares bounced and silver markets surged on Monday as retail investors expanded their social media-fuelled battle with Wall Street to drive the precious metal to an eight-year high.
Stock markets were roiled last week after a spike in retail demand to buy the stocks most bet against by hedge funds drove huge gains in companies such as GameStop Corp, and prompted fresh concern that COVID-19 monetary and fiscal support measures were fuelling a market bubble.
With chatrooms abuzz with talk that silver was the new target, silver-exposed stocks, funds and coins jumped, helping push spot silver up more than 11%, before gains were trimmed and it last traded up around 9%.
The bullish spirit helped London-listed miners post strong gains, including one of more than 19% for Fresnillo
After falling 3.6% last week – its biggest weekly fall in three months – the MSCI All-Country World Index rose 0.5% by midday, tracking overnight gains in Asia.
Wall Street looked set for an even stronger bounce-back, with futures for the S&P 500 and NASDAQ both up around 1.2%. The VIX ‘fear gauge’ was down 7%.
While the retail battle versus Wall Street, coordinated over online forums such as Reddit, created some systemic risks, the bigger danger was in the tech sector, where some stocks had “eye watering valuations”, Deutsche Bank analyst Jim Reid said.
“Retail has in many parts driven such valuations in the last 10 months. If this pops the wider market will have bigger issues than last week.”
However, with corporate earnings still beating expectations – around 82% of S&P 500 delivering a positive surprise – Kristina Hooper, Chief Global Market Strategist at Invesco, said investors should look through the recent volatility.
“We have to keep in mind that in general, stock market fundamentals are solid.”
Gold followed silver higher, up 0.8% to $1,859 an ounce, while oil also tracked the gains in other commodities, with both Brent crude and its U.S. peer up around 1%. [O/R]
While the stock market tussle continued to grab the headlines, analysts cautioned that the bigger concern was economic momentum as coronavirus lockdowns bite.
Data overnight showed Chinese factory activity slowed in January as restrictions took a toll in some regions. In the euro zone, manufacturing growth remained resilient at the start of the year but the pace waned from December.
British data showed an even greater struggle, with manufacturers facing the twin headwinds of COVID-19 and Britain’s exit from the European Union.
While the stock market tussle continued to grab the headlines, analysts cautioned that the bigger concern was economic momentum as coronavirus lockdowns bite.
Data overnight showed Chinese factory activity slowed in January as restrictions took a toll in some regions. In the euro zone, manufacturing growth remained resilient at the start of the year but the pace waned from December.
British data showed an even greater struggle, with manufacturers facing the twin headwinds of COVID-19 and Britain’s exit from the European Union.
