From The Financial Times:
The interventions of the central bankers “smells of a co-ordinated attack to help boost declining sentiment”, said Adrian Miller, director of fixed-income strategy at GMP Securities. “Markets need to check into the Betty Ford Center and go into rehab, to wean themselves off this addiction to central bank support. If that means more volatility and lower prices in some asset classes, so be it.”
The hints that US and UK monetary policy tightening would indeed be delayed fueled a strong rally in global equities on Friday, ending a turbulent week in financial markets on a more positive note.
The UK FTSE 100 index rose 1.9 per cent on Friday – its biggest one-day increase since July 2013. The FTSE All world index had jumped 1.4 per cent by late afternoon in London, while eurozone stocks were up 3 per cent – their biggest one day jump in more than two years. In New York, the US S&P 500 closed up 1.3 per cent.
However, the rises failed to wipe out previous losses with the FTSE All world index ending 0.8 per cent lower than the previous Friday – its fourth consecutive weekly decline.
The turnaround closed a volatile week which saw investors rushing into the safest assets, such as US Treasuries, UK gilts and German Bunds on fears of slower global growth and renewed eurozone political tensions. On Wednesday, 10-year US Treasury yields dived sharply within a matter of minutes before rising again.
US and eurozone inflation rates expected by markets have also fallen sharply, and the ferocity of market moves appears to have alarmed policy makers who saw little new to justify the gyrations.