Market meltdown relents with global rally, rand continues to rebound
- Global markets rally on Friday, pausing after several days of aggressive selling.
- "It's a pause for breath, we've had a sharp drawdown and now the market has taken a breath," Kerry Craig, global market strategist at JPMorgan Asset Management said.
- Stocks in Asia and Europe are higher, while US futures point to gains of more than 1% in US equities when the market opens in a few hours.
Stock markets in Europe and Asia are rallying on Friday after a fierce sell-off gripped global markets over the previous four days of trading.
At the close in Asia, all major share indexes had pulled back at least some of their losses over the past week, although all remained significantly lower than at the start of the week.
In Friday morning, European indexes were largely higher by close to 1%, with Germany's DAX leading the way higher.
Major indexes climbed in Asia, with the China A50 index gaining close to 2.5%, and Hong Kong's benchmark Hang Seng index jumping around 1.8%. Stocks are still down substantially from the beginning of the week, however.
The JSE's all share index was up 1.3% by midday. Some of the biggest gainers were Aspen (+4.85% to R162.19), Massmart (+4.6% to R91.40) and Naspers (+2.8% to R2,756).
Naspers owns a large stake in the Chinese internet giant Tencent, which has seen a massive slump in its share price. Some $252 billion has been wiped off its value since January. Tencent gained 8% on Friday.
After a 2% fall for the Dow on Thursday, it looks like Friday should see US equities bounce a little. Futures currently point to all three major US indexes gaining when they open later in the day
It is unclear whether Friday's rally is simply a pause in a longer downward move for markets, or whether the last few days have just been a blip in a continuing uptrend, but Stephen Innes, head of trading for Asia Pacific at OANDA put the rally down to tiredness in the market.
"This market is exhausted from all after the most significant sell-off in global equities since February," he said in an email on Friday morning.
Kerry Craig, global market strategist at JPMorgan Asset Management agreed, saying: "It's a pause for breath, we've had a sharp drawdown and now the market has taken a breath."
"It's like a Jenga tower. The market has been a tower of blocks, it's been strong over [the] past 12-18 months but then a few of the bottom blocks have been knocked out. That doesn't mean it's going to collapse, it just means there's more risk in the market than there had been."
What's up with October?— Deon Gouws (@DeonGouws_Credo) October 12, 2018
More than half of the 16 worst individual days in stock market history happened during the month of October...
(to be clear though, and as pointed out by @michaelbatnick, this Wednesday's market move was only the 284th worst day for the Dow since 1915) pic.twitter.com/SBDcJrGiWb
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