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Stock prices in the United States and Europe hit their highest levels since the start of the pandemic as optimism grows that Joe Biden’s $ 1.9 billion stimulus package may reflect a struggling global economy without triggering a surge in inflation.
Demand for U.S. tech stocks pushed the Dow Jones Industrial Average above the 32,000 level for a brief period, while the Stoxx 600, a key European equity index, closed at its highest level since late. February of last year.
The bullish mood in financial markets resulted in a surge of more than 27% at US video game retailer GameStop to $ 246.90. Stocks climbed to nearly $ 400 earlier this year when small investors rallied to take on hedge funds hoping to profit from the decline in the stock price.
Shares then fell back to around $ 40, but rallied over the past week after the company announced plans to go online. The move will be led by major shareholder Ryan Cohen, 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 pushed to move away from its traditional business model to become a technology-driven company focused on games and digital experiences.
US markets were generally more bullish that some of the money that will be sent directly to US households as part of the Biden stimulus package will be invested in the stock market. All US markets closed higher with a renewed appetite for tech stocks, pushing the Nasdaq to 3.7%, Tesla, which suffered heavy losses this year, one of the biggest gainers on the rise. 19.6%.
Bitcoin was on track for a fifth day of gains at just over $ 54,000, and some analysts predicted it would hit a record high of $ 60,000 by the end of the week.
London’s main stock index, the FTSE 100, closed 11 more points at 6730, its highest level in three weeks but still well below its level in early 2020 before the arrival of Covid-19.
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The rally in US tech companies came as US government bond prices firmed, pushing down yields that had risen as investors anticipated higher inflation and the risk that interest rates would rise sooner. provided that.
Fawad Razaqzada, an analyst with ThinkMarkets, said it could be the “calm before the storm”, and noted that concerns about high valuations of tech companies had surfaced in recent weeks.
“Obviously I don’t have a crystal ball, but I’m not sure that US stocks will be able to keep up with their pace,” he said.
“Granted, markets may overshoot in euphoria, but ultimately, if concerns about tightening monetary conditions intensify, yield-seeking investors may be drawn to ‘safer’ bond market returns. rather than stocks, as yields continue to rise.
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