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Global markets rise as silver becomes latest target of retail frenzy

LaToya Harding
·3-min read

Watch: Global stocks rise after a volatile week on Wall Street

Stocks in Europe surged on Monday thanks to a spike in demand for silver, making a positive start to the new month after January ended on a volatile note.

The FTSE 100 (^FTSE) closed 0.92% higher, while the DAX (^GDAXI) jumped 1.4%, and the CAC (^FCHI) was 1.16% higher.

The best performers in London were those in the basic resource sector, with the likes of Fresnillo (FRES.L) up almost 20% at one point before retreating to close 9% higher. Glencore (GLEN.L), BHP (BHP.L) and Anglo-American (AAL.L) also pushed higher as silver prices hit their highest levels since 2013.

The commodity became the latest target after a retail frenzy last week saw the likes of heavily-shorted GameStop (GME) and AMC Entertainment (AMC) surge in revolt to large institutional investors.

Recently, amateur traders have been buying stocks and assets that Wall Street funds bet against. Similarly, traders are looking to squeeze silver shorts.

File photo
A trader looks at electronic boards at the stock exchange in Madrid, Spain. Photo: Andrea Comas/Reuters

There have been thousands of Reddit posts with multiple mentions of the hashtag #silversqueeze, and a string of videos on YouTube encouraging small investors to buy the precious metal.

Connor Campbell of SpreadEx said: “Silver is the apparently new darling of WallStreetBets, with an astonishing surge in demand propelling the precious metal nearly 12% higher, pushing it beyond $30 an ounce.

“Unlike GameStop which, while it caused wider volatility as investors sought out other short squeezes, trades as an unattached entity, the silver surfers are already starting to impact prices elsewhere. The UK’s miners were strong out of the gate.”

READ MORE: Silver prices soar to five-month high as Reddit army turns to commodities

Across the pond, US stocks started the week in positive territory as technology firms rallied and several strategists commented that the Reddit frenzy would not derail the bull market in equities.

The S&P 500 (^GSPC) was 1.35% up at the European close, while the Dow Jones (^DJI) was 0.74% up. The tech-heavy Nasdaq (^IXIC) jumped 1.95%. It comes as US markets suffered their worst weekly decline since October last week.

Asian shares also rallied on Monday on the back of positive vaccine developments. MSCI's broadest index of Asia-Pacific shares outside Japan (FMASM1.EX) climbed 1.45% after four straight sessions of losses.

Japan's Nikkei (^N225) added 1.55%, after shedding almost 2% on Friday, while Chinese blue chips rose as the country's central bank injected more cash into money markets.

Hong Kong’s Hang Seng index (^HSI) also saw robust gains, advancing around 2.2%.

Mainland Chinese stocks nudged higher on the day as the Shanghai composite (000001.SS) rose 0.64% and the Shenzhen component (399001.SZ) advanced 1.36%.

It came after official data showed that China’s factory activity grew at the slowest pace in five months in January on the back of a wave of domestic COVID-19 infections. However, the results were still in line recovery expectations.

The Purchasing Manager’s Index (PMI) fell to 51.3 in January from 51.9 in December, the National Bureau of Statistics said in a statement on Sunday.

Activity at the world’s second-largest economy still remained above the 50-point mark which separates growth from contraction on a monthly basis.

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