Bear territory beckons as stocks continue to fall

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ECB president Christine Lagarde said on Monday there could be an interest rate ‘lift-off’ at its meeting in July

The bear and bull statues outside the Frankfurt Stock Exchange. Picture: BLOOMBERG/ALEX KRAUS

Investors in Europe drew comfort from the S&P 500 index on Wall Street ending Friday just clear of bear market territory, meaning down 20% from its January 3 record high close.The S&P index suffered its seventh successive weekly fall for the first time since the dotcom bubble burst in 2001, Deutsche Bank said in a note.

“I don’t think we have reached rock bottom yet, it’s a bear market rally. The market is still pretty concerned about sticky inflation,” said Michael Hewson, chief markets analyst at CMC Markets. “We haven’t had that extent of hawkishness from the Bank of England or the European Central Bank, and I think that’s why the losses in Europe have been slightly more modest,” Hewson said.

“The gradual return of optimism continues but only if the focus is limited to the very short run,” ING bank said.The World Economic Forum holds its first in-person meeting in two years in Davos, Switzerland over the coming four days, with central bankers and the International Monetary Fund participating in panels on the outlook for economies and inflation.The dollar index, which tracks the US unit against a basket of currencies of other major trading partners, was down 0.3% at 102.60.

 

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