Market Reactions

The Federal Reserve is going to cut its Quantitative Easing in September.

Job openings are declining in the US (to 3.76 million in April from March’s figure of 3.88 million). The number of lay-offs increased between March and April also from 4.12 million to 4.28 million. There are currently 3.1 job-seekers for every job available in the USA today (but that’s an improvement on last year which had a figure of 3.6 per job). Unemployment is now at 7.6% and that is decrease from last year’s level of 7.8-8%.

The Bank of Japan said: no more stimulus now. The Bank of Japan Governor Kuroda stated that last night. The Japanese economy is picking up today according to the BoJ. But the markets saw a fall of 1.5% during the day and the Yen rose.

The ECB is going to use its bond-buying program only to save the Euro (but not the states that are going under). The UK has a growth rate of 0.6% for three months ending May and there are positive contributions to GDP growth from the private sector. UK growth is expected to reach 0.9% this year. Michael Meister of Germany’s CDU has just this minute announced that there will be no further aid to bail out Greece. We have been told that the Eurozone recession is over.

But it looks like the world’s stock markets are not that convinced that things are getting or going to get better just yet. The Dow rallied on Friday and since yesterday has been down. In fact it’s down everywhere. This is the current state of affairs:

Dow Jones is at 15 152.35, down 86.24 (-0.57%).

Nasdaq is at 3450.96, down 22.81 or -0.66%.

FTSE 100 is at 6301.07, down 99.38, -1.55%.

DAX is at 8181.03 down 126.66 (-1.52).

CAC40 is at 3804.47, down 59.89 (-1.55%).

But, will that change? Are the markets lower because they are afraid that the stimulus plan is going to be taken away from them? Look at what has just happened this very second with the remark by European Central Bank Executive Asmussen that said that there was going to be no limit to the bond-buying scheme. He stated in his introductory statement at the Federal Constitutional Court that it had to be unlimited if it was going to be workable and credible. What did that have as an effect on the Euro? It rallied as high as $1.3314, which is the highest for almost four months.

Surely, that’s what the markets need, isn’t it? Proof from the horse’s mouth that they will be there to back the markets just in case there is a complete failure of the economy and it all goes for a downturn?

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Professional team of writers/analysts analyzing the financial markets.

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