FTSE 100 bounces back after week of turmoil
The FTSE 100 rose today after a week of big losses following global stock market turmoil.
London's blue-chip companies gained more than 1.2 per cent approaching the middle of the trading session, with highs just short of the 7,200 points mark.
The gain has left investors pondering if last week's big sell-off, which saw a peak-to-trough fall on the FTSE 100 a whisker shy of 10 per cent correction territory, is the start for a broader bear market or a healthy readjustment.
Richard Stammers, investment strategist at European Wealth Group, said he expects the "short term to remain bumpy – possibly very bumpy".
"For every short term bounce there could be an equal and opposite slide back," he said, with a 15 per cent fall from the peak not impossible.
However, he added the latest sell-off represents a "buying opportunity", with strong economic fundamentals across major developed economies.
That confidence has been echoed by central bankers. The Bank of England's governor last week said it was a healthy thing for equity markets to be able to correct after a period of unusual calm.
Fears of a serious challenge to stability were also limited because of the relatively confined nature of the sell-off: while rising bond yields in the face of higher inflaiton were part of the trigger for the stock market fall, currency markets remained little affected.
However, the near term could still prove painful if investors pile back in to stocks.
Fiona Cincotta, senior market analyst at City Index, said: "Whether this proves to be anything more sustainable than a dead cat bounce remains to be seen.
"The US futures markets are also pointing to a stronger start for the Street, but its too early to get complacent that this correction has bottomed out."