Markets jump on trade optimism, December decline seen as overreaction

Markets rose on Friday.

The S&P 500 rose 1.3 percent, the STOXX Europe 600 surged 1.8 percent and the Shanghai Composite jumped 1.4 percent.

Optimism was boosted by a report that China has offered to increase imports from the US by US$1 trillion over the next six years.

Some analysts now think that investors overreacted when they dumped stocks in December.

“December was out of line with fundamentals,” said Richard Bernstein, CEO of Richard Bernstein Advisors.

Still, others think that the rally may be getting ahead of itself.

“The market is rallying like we are going to get both a trade deal and a dovish Fed, but if you take away trade risks, there's a good chance the Fed will get more hawkish,” said Alec Young, managing director of Global Markets Research at FTSE Russell.