Global stocks have rallied after the US central bank said it was stepping up its efforts to keep lending markets running smoothly amid renewed jitters over the spread of coronavirus.
Values have been knocked over the past week over fears of a so-called ‘second wave’ of coronavirus infections – first in the United States and latterly in China.
Stock markets tumbled on Monday after it was revealed that Chinese authorities had closed popular food markets in Beijing on the discovery of a cluster of COVID-19 cases.
The development rattled investor hopes that the gradual re-opening of the global economy would be a smooth process.
But Wall Street values recovered lost ground and ended the day positively when the Federal Reserve confirmed it would begin buying a broad spread of individual corporate bonds as part of its pandemic commitments to the market.
News, on Tuesday, that Japan’s central bank was to maintain its lending-friendly conditions also helped Asian stock markets put on weight with the Nikkei in Tokyo closing almost 5% higher.
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In Europe, the FTSE 100 was trading 2.5% up, back above the 6,200 point level following Monday’s declines.
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There were similar increases for the DAX in Frankfurt and France’s CAC 40.
US futures suggested the rally would be extended for both the S&P 500 and Dow Jones Industrial Average.
Market analysts cited additional support from a Bloomberg News report that the Trump administration was preparing to announce details of a possible new stimulus package to support the economic recovery ahead.
Fed chairman Jay Powell told reporters last week that US interest rates could be at their current low right through 2022 as part of its support.
Neil Wilson, chief market analyst at Markets.com, said of the moves: “The Fed is stepping things up after its statement last week left investors more than a little concerned about the pace of recovery.
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“The move suggests that the Fed, as was clear last week, is worried about the economy enduring a protracted downturn.
“Meanwhile the White House is again said to be mulling a $1tn infrastructure plan to stimulate the economy.
“The two horsemen of risk sentiment recovery – monetary and fiscal stimulus – riding to the rescue again.”
Source : Sky News