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NEW YORK (Reuters) – Global stocks rebounded from last week’s sell-off and silver prices surged on Monday as retail investors broadened their social media-fueled battle with Wall Street to lead the precious metal at an eight-year high.
A shift from the silver-to-silver retail frenzy has driven mining stocks up on both sides of the Atlantic and left precious metals dealers scrambling for bullion and coins to meet demand.
The iShares Silver Trust ETF – the largest money-backed ETF – jumped 7.1%. Data showed his holdings rose to a record 37 million shares from Thursday to Friday alone, each representing an ounce of silver.
Mining giants BHP Group, Glencore Plc and Anglo American Plc were the first six winners of the FTSE 100 in London, with the blue-chip index closing up 0.92%.
Miner Fresnillo rose 8.95% to 1,076 to help lead the pan-European STOXX 600 index 1.24% higher.
US small-cap mining companies Hecla Mining Co and Coeur Mining Inc jumped 28.3% and 23.1% respectively.
Silver prices hit an eight-year high of just over $ 30 an ounce before slashing gains to trade up 6.3% to $ 28.70.
The trading frenzy led to huge gains at companies like GameStop Corp last week, forcing hedge funds to hedge bets on the decline. GameStop slipped 30.77% to $ 225.00.
“Money has a ripple effect over GameStop because it has links to miners,” said Connor Campbell, financial analyst at SpreadEx. “If you start pushing the money higher, it will have effects on other industries and other markets and that is clearly what has happened.”
Silver has gained 19% in price since Thursday after posts on Reddit led retail investors to buy silver mining stocks and exchange-traded funds (ETFs) backed by physical silver bullion, in a GameStop style.
Cash rose 6.97% to $ 28.88.
MSCI’s benchmark index for global equity markets rose 1.47% to 652.35.
On Wall Street, the Dow Jones Industrial Average rose 0.76%, the S&P 500 by 1.61% and the Nasdaq Composite by 2.55%.
The US dollar rebounded to a two-week high on the strength of the euro, Swiss franc and Japanese yen as the United States has an advantage in growing its economy and immunizing its population against COVID-19.
The euro weakened after Germany announced that retail sales fell unexpectedly 9.6% in December after tighter lockdowns last year to curb the spread of COVID-19 that stifled spending consumption in Europe’s largest economy.
The dollar index rose 0.461%, with the euro down 0.66% to $ 1.2056.
The Japanese yen weakened 0.25% against the greenback to 104.94 per dollar.
Oil prices have risen, supported by dwindling inventories and hopes for a faster global economic recovery, although halting vaccine deployments and renewing travel restrictions have capped gains.
Brent futures have stabilized at $ 1.31 to $ 56.35 per barrel. U.S. crude futures rose $ 1.35 to $ 53.55 per barrel.
Gold followed silver higher, up 0.77% to $ 1,860.22 an ounce. US gold futures rose 0.7% to $ 1,863.90.
(Chart: Silver has outperformed gold in terms of price and ETFs in recent months 🙂
Overnight data showed Chinese factory activity slowed in January, with restrictions wreaking havoc in some areas. In the euro zone, manufacturing growth remained resilient at the start of the year, but the pace slowed down from December.
UK data has shown an even greater struggle, with manufacturers facing the two headwinds of COVID-19 and Britain’s exit from the European Union.
As the rollout of the coronavirus vaccine around the world remains slow, with concerns over whether they will work on new strains of COVID, Europe has also been bolstered by the announcement that it will receive 9 million doses additional AstraZeneca in the first quarter.
As riskier markets rebounded, Italian government bond yields fell 2-3 basis points across the curve.
Yields on the German Bund, the eurozone benchmark, remained pegged around -0.51% on Monday, following yields on US Treasuries. The 10-year US Treasury bill fell 2.8 basis points to return 1.0672%.
Reporting by Herbert Lash; Edited by Richard Chang
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