Good end to a rollercoaster week for stock markets

There was a good end to an otherwise rollercoaster week for stocks markets with the FTSE 100 gaining around 2.2% despite data that showed the weakest Michigan Consumer Sentiment index since 1980.

It was in truth a mixed bag of US data today and whilst consumer sentiment data paints a dark picture of confidence in the future path of US growth and the state of its economy, the fact that US retail sales grew at their fastest pace since March helped to balance this disappointment somewhat.

Markets likely to remain volatile next week
The gains seen today was enough for the FTSE 100 finish the week positively in what otherwise had been one of the most choppy weeks for trading for some time, with investors unsure how to trade a market exerting high degrees of sensitivity and caution. It was these factors that meant most rallies were short-lived and quickly sold into with investors quick to lock in any gains seen in case they quickly reversed.

It is unlikely therefore that this week’s gains is enough to help restore investors confidence in the market, who may be disappointed that we have not seen a bigger bounce this week which would have helped to convince them that the severe selling of shares across Europe and the US since the start of August was overdone.

The fact that we have not seen an immediate bounce in stock prices this week emphasises the fact that investors are still very nervous, and considering this week we have had to deal with markets hitting 20% lows (from year highs), constant rumours about the financial stability of French banks and a ban on short selling for a number of European banks, who can blame them. There is every chance that this nervousness could continue next week with stock markets remaining every bit as volatile as this week.

Whilst University of Michigan Confidence data badly disappointed the market, data out from the US earlier in the day showed that US retail sales grew by 0.5% in July, marking its biggest monthly gain since March this year. Whilst this figure came in line with market consensus, it did satisfy investors, and we saw shares see higher demand on the back of it, giving the FTSE and European Indices more gains to enjoy in the afternoon session.