Global equities rally, retail surging propels silver to its 8-year high

LONDON (Reuters) – Global stocks rallied and silver markets rallied Monday as retail investors expanded their social media-fueled battle against Wall Street to propel the precious metal to an eight-year high.

Stock markets were in turmoil last week after a spike in retail demand to buy the stocks that hedge funds are most betting against generated huge profits for companies such as GameStop Corp and sparked new concerns that COVID-19 was monetary and fiscal. support measures fuel a market bubble.

With chat rooms buzzing with words that silver was the new target, stocks, funds and coins exposed to silver soared, contributing to spot silver’s rise by more than 11%, while London-listed miners soared, including Fresnillo , an increase of 18%.

After falling 3.6% last week – the largest weekly drop in three months – the MSCI All-Country World Index rose 0.5% in early deals, tracking earnings overnight in Asia .

MSCI’s widest index of Asia-Pacific stocks outside Japan climbed 1.9%, while Japan’s Nikkei added 1.5% and Chinese blue chips rose 1.2% after the country’s central bank injected more money into the money markets .

Futures for the S&P 500 and NASDAQ both pointed to a stronger opening on Wall Street, up about 1%.

While the retail battle against Wall Street, coordinated through online forums such as Reddit, posed some systemic risks, the greater danger was in the technology sector, where some stocks had “dazzling valuations,” Deutsche Bank analyst Jim Reid said.

“The retail sector has led to such valuations in many areas over the past 10 months. If this emerges, the broader market will be in bigger trouble than last week. “

Gold followed higher than silver, up 1% to $ 1,864 an ounce, while oil also followed gains from other commodities, with both Brent crude oil and its US counterpart gaining about 1%. [O/R]

Chart: Silver has outperformed gold in terms of price and in ETF holdings in recent months –

As the stock market struggles continued to make headlines, analysts warned that the greater concern was economic momentum in the United States and Europe as the coronavirus blockages bite.

Indeed, two studies from China showed that factory activity slowed in January as restrictions took their toll in some regions. In the eurozone, output growth remained resilient at the start of the year, but slowed from December. Data from Great Britain will be at the center of the European session later.

While the roll-out of the coronavirus vaccine has been slow worldwide, with concerns about whether they will work on new COVID strains, Europe was also bolstered by the news that it would receive an additional 9 million doses of AstraZeneca in the first quarter.

“It is these considerations, not what happens to a video game retailer on a daily basis, that weighed on the risk assets,” said John Briggs, global head of strategy at NatWest Markets. “So many of the market valuations, especially risk, are based on the fact that we can see a light at the end of the COVID tunnel.”

Higher interest rates coupled with more cautious market sentiment have kept the safe-haven dollar stable above its recent lows. The dollar index stood at 90.722, from a low of 89.206 in early January.

The euro, meanwhile, fell 0.3% to $ 1.2100, well below its recent peak of $ 1.2349, while the pound was the biggest gain in the G10 currency group, up 0.3% in a day at $ 1.3732.

With a rebound in riskier markets, Italian government bond yields fell 2-3 basis points across the curve.

Yields on German government bonds, now the benchmark for the eurozone, remained anchored around -0.51% on Monday, following those on US government bonds, which also remained unchanged.