Meme stocks favoured by retail investors in online forums have soared after previously surging in January, while in an otherwise quiet session European stocks hovered around their peaks after hitting record highs on Tuesday.
Cinema chain AMC was up 26.8 per cent in pre-market trading after announcing on Tuesday it had raised $230.5m by selling 8.5m new shares to Mudrick Capital Management at just over $27 a share. Mudrick had reportedly sold its entire position by the end of the day at a profit.
Shares in mobile phone maker turned software company BlackBerry, another meme stock favourite, rose 11.2 per cent. GameStop had a more modest pre-market gain of 2.6 per cent.
The Stoxx 600, which reached record levels on Tuesday, was up 0.2 per cent, with energy stocks among those showing the largest gains as investors bet on increased demand as the Covid-19 crisis recedes.
France’s Cac 40, which reached a 2021 high on Tuesday, rose 0.3 per cent while Germany’s Dax, which also hit a record, was flat. In the UK, the FTSE 100 was up 0.2 per cent, led by a combination of luxury stocks and energy companies including Royal Dutch Shell and BP.
Rupert Thompson, chief investment officer at Kingswood, said the resilience of equity markets was surprising, given the lack of significant good news to push them higher. “We’re now in June, typically the weakest month of the year,” he said. “In a way they’re overdue a pause.”
Investors continued to weigh whether recent upticks in inflation will prove transitory, as central bankers who are loath to withdraw crisis-era stimulus measures have argued, or structural. Eurozone flash core inflation readings came in at 2 per cent on Tuesday for the first time since 2018, pushing at the edges of the European Central Bank’s target range.
Despite this, most analysts expect the ECB to maintain its €80bn monthly bond purchase programme when it meets next week. “We expect the ECB to look through the May print and [second half of 2021] hump in inflation . . . and focus on the medium-term outlook for inflation,” analysts from Morgan Stanley wrote.
In the US, where the recovery is more advanced, some investors fear the risk of overheating is more serious, potentially pushing the US Federal Reserve to tighten its monetary policy. “It seems to me that the inflation risk is very much concentrated in the US and going to get worse before it gets better,” said Thompson.
Wall Street looked set to open flat, with index futures for the S&P 500 and the tech-focused Nasdaq fluttering around zero.
Bond yields fell slightly, with those of the benchmark German 10-year Bund down 0.021 percentage points to minus 0.196 and the UK 10-year gilt down 0.018 percentage points at 0.811.
Oil prices, which came close to their highest since the start of the pandemic on Tuesday, maintained their gains following a meeting by Opec+ in which members stuck to their plan to gradually release more barrels into the market.
Brent crude, the global benchmark, hit its highest level since a pandemic high in early March in intraday trading, and remained over $71 a barrel. The US benchmark, West Texas Intermediate, was over $68 a barrel.