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 trillion stimulus package can rekindle a shaken global economy without triggering an increase in inflation.
Demand for U.S. technology stocks took the Dow Jones Industrial Average above the 32,000 level for a brief period, while the Stoxx 600, a key European stock index, closed at its highest level since the end of February last year. .
The upbeat mood of the financial markets was reflected in a jump of more than 27% at the US computer games store GameStop, to $ 246.90. The shares soared to nearly $ 400 earlier this year, when small investors came together to contract hedge funds that hoped to profit from the falling share price.
The shares subsequently fell to around $ 40, but rose last week after the company announced plans to move online. The move will be led by a majority 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 has been pushing to move away from his traditional business model to become a technology-based business focused on games and digital experiences .
US markets have generally been stronger in optimism that part of the money that will be sent directly to American families as part of the Biden stimulus plan will be invested in the stock market. All U.S. markets closed higher with renewed appetite for tech stocks pushing Nasdaq up 3.7% with Tesla, which suffered big losses this year, one of the biggest winners rising 19.6%.
Bitcoin was underway for a fifth day of gains at just over $ 54,000, and some analysts predicted 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 above 6,730, 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 recovery of US technology companies occurred with the strengthening of US government bond prices, reducing yields that had gone up, as investors predicted higher inflation and the risk that interest rates would rise earlier than expected.
Fawad Razaqzada, an analyst at ThinkMarkets, said it could be “calm before the storm”, and noted that concerns about the high ratings of technology companies have 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 pace,” he said.
“It is true that markets can push the limits amid the euphoria, but, ultimately, if concerns about more restrictive monetary conditions intensify, investors looking for yield may be attracted to the ‘safer’ returns on bond markets instead of stocks, as yields continue to rise. ”