NEW YORK, Feb 3 — Global stock markets surged for a second day yesterday, spurred by increased optimism about more US stimulus and the economic recovery, while retail investors retreated from GameStop and fleeting interest in silver, causing their prices to tumble.
The party for the Reddit-inspired trading frenzy that pushed GameStop’s stock up five-fold in five days last week appeared over as its shares plunged 60 per cent in heavy trade to close at US$90.00 (RM364), less than one-fifth of an all-time peak on Friday.
Silver prices also fell yesterday, sliding 8.5 per cent to US$26.54, after exchange operator CME Group Inc raised maintenance margins on its COMEX 5000 Silver Futures contract by 17.9 per cent to their highest since October 2020.
CME’s move on silver took the air out of GameStop too, with short interest declining to 53 per cent of the stock’s available shares to trade, from 140 per cent, said Tom Hayes, founder and chairman of hedge fund Great Hill Capital LLC in New York.
“Everyone’s rushing for the same narrow exit and trying to get off margin, and you have a lot of weak sisters that are coming out of the stock,” Hayes said. “The squeeze is over.”
Equities rallied as investors saw improved prospects for President Joe Biden’s proposed US$1.9 trillion Covid-19 aid bill. The US Senate voted to open debate on a budget resolution, starting a process that would allow Democrats to pass Biden’s package without Republican support.
Expectations for Alphabet’s Google and Amazon.com earnings after the bell were high and lifting investor sentiment, Hayes said. “Very few people want to be short going into that type of earnings report,” he said.
Google closed up 1.38 per cent and Amazon added 1.11 per cent. The two stocks were among the top boosts to the S&P 500; 97 per cent of technology companies have beaten analysts’ earnings estimates, IBES data from Refinitiv shows.
The Dow Jones Industrial Average rose 1.57 per cent, the S&P 500 gained 1.39 per cent and the Nasdaq Composite added 1.56 per cent. Advancing shares outnumbered declining ones by almost 3:1 on both the New York Stock Exchange and Nasdaq.
Positive momentum overnight in Asia carried through to Europe, with the pan-European STOXX 600 closing up 1.29 per cent.
Medical device maker Coloplast and Sweden’s Indutrade were the top gainers on STOXX 600 on beating quarterly earnings.
Initial European Union estimates showed the euro zone economy contracted less than expected in the fourth quarter but was headed for another, probably steeper decline, in the first quarter of 2021.
MSCI’s world equity index, which tracks shares in 49 countries, was up 1.34 per cent after posting its strongest day in three months on Monday. Its emerging markets index rose 1.52 per cent.
MSCI’s gauge of Asia-Pacific stocks outside Japan rose 1.4 per cent. China’s benchmark CSI300 Index gained 1.5 per cent, helped by easing concerns about tight liquidity and declining cases of new coronavirus infections. Japan’s Nikkei 225 added 1 per cent.
The dollar rose to two-month highs against the euro on a perceived widening disparity between the strength of US and European economic recoveries from the coronavirus pandemic.
A sell-off in the euro after coronavirus lockdowns choked consumer spending in Germany and short-covering in over-crowded dollar-selling positions also strengthened the greenback.
The euro was last down 0.17 per cent at US$1.2038. The Japanese yen weakened 0.08 per cent at 105.02 per dollar.
The Australian dollar pared gains after the country’s central bank said it would extend its quantitative easing programme to buy an additional US$100 billion of bonds. The Aussie last stood at US$0.7602, off the day’s high of US$0.7662.
Core euro zone government bond yields edged up, with the benchmark German 10-year Bund yield around two basis points higher at -0.484 per cent.
The 10-year US Treasury note yield rose about 0.2 basis points to 1.1014 per cent.
US gold futures settled down 1.6 per cent at US$1,833.40 an ounce.
Oil prices rose 2 per cent or more to their highest in nearly 12 months after major producers showed they were reining in output roughly in line with their commitments.
Brent crude futures rose US$1.11 to settle at US$57.46 a barrel. US crude futures settled up US$1.21 at US$54.76 a barrel. — Reuters
Source: Malay Mail
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