European stocks bounced back after generating back to back losses in the past couple of sessions due to the tech sector selloff. The rally is initially prompted by oil and drug companies while the US tech sector rebound accelerated the gains in the afternoon session.
The Stoxx Europe 600 index jumped 0.7% following reporting losses in the past seven out of nine sessions. Major European stock markets, including German, London, and French ended higher on Wednesday. The tech-heavy Nasdaq soared more than 2% on Wednesday after reporting a loss of over 4% in Tuesday trading session.
“There is yet to be a clear signal that the index has passed an inflection point, although the possibility remains that the pandemic-fuelled rise of the last few months may be easing as the world returns to some sort of normality,” said Richard Hunter, head of markets at Interactive Investor, in a note to clients.
Brent crude oil moved back to $40 a barrel range while the US oil is trading around $37 a barrel. Crude oil has hit the lowest level since June due to concerns over slower demand.
The lower oil demand forecasts also dented investor’s sentiments. The Energy Information Administration (EIA) dropped its oil demand growth guidance to 8.32 million bpd this year, down 210,000 barrels per day from the earlier forecast.
EIA also expects lower demand for the next fiscal year amid slower than expected economic recovery.
Gold price regained momentum after generating losses at the beginning of the week. The gains are supported by a retreat in US dollar value and an increase in the euro currency value.
What Does it Mean for Investors?
- European stock market investors are buying stocks after the recent dip.
- Tech stocks rebound amid bright future fundamentals.
- US dollar retreats from 93.5 level while the euro gains some momentum in Thursday trading.