Global markets have continued to rally after the ‘Black Monday’ event last week, which saw stock markets crash over fears of a US recession.
Since then, markets have now bounced back, as fears over recession have faded after strong US retail sales data and unemployment numbers.
The Japanese Nikkei 225, which fell almost 20 per cent over the course of three days, has now recovered its August losses, and is up 14 per cent since the start of the year.
Similarly, the S&P 500 and Nasdaq are flat over August, recovering from their three-month lows last week, and are now up 17 and 19 per cent respectively.
The Nikkei rose 3.6 per cent today alone, while the S&P 500 is up 1.6 per cent in pre-market trading today.
The one exception to the strength of global markets today has been the UK, with the FTSE 100 and 250 falling 0.5 per cent and 0.3 per cent respectively throughout the day.
However, this was largely due to disappointing retail sales numbers in July being announced today, and both British markets have still recovered from the dip on Monday 5 August.
“The market’s short, sharp shock at the start of August is starting to feel like a distant memory as global indices claw back their losses and the VIX volatility index falls back to the sort of levels it has seen for much of the last year or so,” said AJ Bell investment director Russ Mould.
“Yesterday’s stronger-than-expected US retail sales and bumper earnings from Walmart helped to alleviate fears the US economy could be about to tip into recession.”
Markets have also calmed on expectations of the size of an interest rate cut coming from the Federal Reserve in its September meeting.
Market odds of a large 0.5 per cent cut from the Fed at their next meeting spiked as low as 85 per cent last Monday, but have since reduced to just 25 per cent, according to data from CME Group.
A similar movement has happened for where markets think US interest rates will be by the end of the year, with the market pricing in around one less 0.25 per cent cut by December.