London led a European share-price rally this morning after the savage sell-off seen earlier in the week.
Shaking off the war of words between President Donald Trump and the US central bank, the Federal Reserve, traders and investors marched back into stock markets in a buying frame of mind.
All eyes now will be on Wall Street when it opens later today. Yesterday saw more falls after heavy selling on Wednesday. The blue-chip ended Thursday down 2.13% at 25,052.83, while the broader-based index closed down 2.06% at 2,728.37.
The tech-heavy index was not spared – it closed 1.25% lower at 7,329.06.
“A significant hit”
A number of factors appear to have triggered the sell-off. Rising trade tensions between the world’s two largest economies, America and China, have certainly contributed to the turmoil, as acknowledged by some of those attending the annual meeting of International Monetary Fund (IMF) in Bali, Indonesia.
Christine Lagarde, managing director of the IMF, warned that worsening US-China trade relations threatened the world economy with “a significant hit”.
Mr Trump said the Fed was “making a big mistake” in raising rates, adding: “I really disagree with what the Fed is doing. The Fed is going loco. I think the Fed has gone crazy.”
Tensions between the White House and the Fed are not new. Ronald Reagan dropped heavy hints in the run-up to his 1984 re-election bid that higher rates would spoil his “morning in America” narrative. His successor George HW Bush blamed higher rates for costing him the 1992 election.