Stock prices in the US and Europe have reached their highest levels since the start of the pandemic, as optimism grows that Joe Biden’s $ 1.9 billion stimulus package could ignite a battered global economy without triggering an inflation attempt.
Demand for US technology stocks drove the Dow Jones Industrial Average above the 32,000 level for a brief period, while the Stoxx 600, a major index of European stocks, closed at its highest level since late February last year.
The positive mood from the financial markets was reflected in a jump of more than 27% in US computer game retailer GameStop to $ 246.90. Shares rose to nearly $ 400 earlier this year as small investors banded together to raise hedge funds hoping to take advantage of the declining stock price.
Shares have subsequently plummeted to around $ 40, but have risen in the past week after the company announced plans to go online. The move will be led by major shareholder Ryan Cohen, the co-founder of an online pet products company.
Cohen took a large stake in GameStop last year, when shares were between $ 6 and $ 18, and has pushed to move away from his traditional physical business model to become a technology-driven company focused on gaming and digital experiences .
US markets have generally been stronger with optimism that some of the money that will be sent directly to US households as part of Biden’s stimulus plan will be invested in the stock market. All US markets closed higher with a renewed interest in technology stocks, pushing the Nasdaq the highest at 3.7% with Tesla taking large losses this year, one of the biggest risers up 19.6%.
Bitcoin was on track for a fifth day of gains of just over $ 54,000, with some analysts predicting it would hit a record $ 60,000 by the end of the week.
London’s main stock price index, the FTSE 100, closed 11 points higher at 6,730, its highest level in three weeks, but still well below its early 2020 level before the arrival of Covid-19.
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The rally in US tech companies came when US Treasury bond prices rose, pushing down yields, which had risen as investors anticipated higher inflation and the risk that interest rates would rise sooner than expected.
Fawad Razaqzada, an analyst at ThinkMarkets, said it could be the “calm before the storm,” noting that concerns about high valuations from technology companies had surfaced in recent weeks.
“Obviously, I don’t have a crystal ball, but I’m not too sure US stocks will be able to keep up,” he said.
Admittedly, markets may skyrocket in the midst of euphoria, but as concerns about tighter monetary conditions grow, investors looking for returns may be attracted to the ‘safer’ returns in bond markets rather than stocks as yields continue to rise. . “