US markets reversed a downward trend seen across the world on Thursday that had earlier spelled sharp losses on fears that the United States is preparing an end to stimulus measures that have propped up the world’s largest economy.
The Dow Jones was up 0.32 per cent to 15,046.67 in mid-day trading, on reports of strong retail sales and a drop in unemployment applications.
The news provided a last-minute boost for European bourses, many of the largest of which had seen drops of between 0.7 and 1.5 per cent earlier in the day.
Instead, in late trading, The Euro Stoxx 50, Europe’s leading blue-chip index for the Eurozone, managed to pull itself up by 0.23 per cent. The FTSE 100 and CAC 40 also managed slight gains, though Germany’s DAX remained negative, down by 0.58 per cent.
The falls came after Asian stock markets suffered huge losses as foreign investors fled to safe havens over concerns that the US was scaling down stimulus measures.
The Federal Reserve has hinted it might start scaling back the plan, but no firm date has been set. The Fed is set to meet next week.
Market sentiments were also dampened after the World Bank cut growth forecast for the global economy to 2.2 per cent this year, from its January estimate of 2.4 per cent.
It cited deeper-than-expected recession in Europe and a slowdown in China and India for the downgrade.
“The trigger for the sharp fall is Japan, where the Nikkei fell by 6.35 per cent this morning,” said Ludwig Donnert of Tao Capital in Frankfurt.
Traders in Asia said fund managers were exiting Asian markets amid fears that the US Fed would scale back a massive bond—buying programme following signs of an improving economy.
The Fed has been spending 85 billion dollars a month to buy bonds to push down interest rates in a bid to prop up the US economy by triggering borrowing and spending