US stocks opened higher, joining the partial recovery in European markets after their heavy losses on Thursday.
The Dow Jones index rose 3.24% to 25,942.07, the FTSE 100 in London rose 1.74% to 6,182. The French Cac 40 was up almost 2% and the German Dax 1 , 25%.
Thursday’s steamy trade plunged the Dow Jones by 7% and Europe by 5%. Despite the gains, the Dow Jones is still 1,000 points below Thursday’s opening level.
The declines were caused by gloomy economic and health news from the United States.
However, markets remain volatile as investors struggle to assess the economic damage from the coronavirus.
Thursday’s liquidation was prompted by a bleak view of the US economy at its central bank, the Federal Reserve, and reports of an increase in coronavirus cases in some states.
Joshua Mahony, analyst at IG, said, “We seem to be moving from a phase where everyone is looking toward reopening as a cause of optimism, to one where we are starting to focus on Covid case numbers with concern.
“We are certainly anticipating a resumption of market volatility and sensitivity in the [new] Covid affairs are coming. ”
Earlier, the Asian markets reflected the downtrend overnight but were much less affected. IG said this underscored the feeling that a potential second wave of coronavirus was more likely in the United States or Europe.
The Japanese Nikkei finished down 0.75% to 22,305, while the Hong Kong Hang Seng index fell 0.7% to 24,301.
Thursday’s falls on Wall Street followed a weeklong rally that helped stocks recover from March lows.
The rally was sparked by hopes that the US economy would rebound as authorities relaxed restrictions in an attempt to slow the spread of the virus.
Last week’s surprise report, showing that US employers started hiring again in May, helped push the tech-intensive Nasdaq index to new heights.
But the recovery remains timid. On Thursday, the US Department of Labor announced that an additional 1.5 million people had filed new unemployment claims last week. More than 30 million people continue to receive the benefits, he added.
US Federal Reserve policymakers said on Wednesday that the unemployment rate could remain above 9% at the end of the year – near the worst level of the financial crisis,
Several US states that have taken steps to relax lock-in restrictions, including Arizona and South Carolina, have seen an increase in Covid-19 cases in recent days.