St. James's Place News
Twists and turns dominate the markets
It was a rare week in which economics dominated politics. Equities, government bonds and currencies experienced yet another volatile period as fears of a global slowdown cast a shadow over policymakers’ efforts to ease the eurozone debt crisis and boost the US economy.
The early positivity arising from the Greek election results lasted only a matter of hours, fading once investors realised there would be few developments from the G20 meeting in Mexico.
Market anxiety was also heightened by weak manufacturing data in China, Europe and the US, as well as poor US housing and employment numbers. Analysts had expected these indicators to speed up the arrival of further Federal Reserve stimulus, but the announcement of an extension to its ‘Operation Twist’ programme disappointed those who wanted a more aggressive response to support the US economy.
Also in this week's bulletin...
- The market reacted with indifference to the decision of the ratings agency Moody’s to downgrade 15 major global banks and fears that this would increase the costs of wholesale lending – passed on to consumers through higher mortgage costs – appear overdone as lenders suggest this will have “limited impact on funding costs”.
- Investors remained concerned over the future of Europe and the desire, or ability, of those nations to formulate and deliver a successful solution to the problems.
- Further quantitative easing looks more likely after the release of the latest minutes of the Monetary Policy Committee, which reveal that three members voted for additional stimulus to kick start the economy.
View this week's Market Bulletin (PDF), which contains thoughts and opinions of St. James’s Place and our range of investment managers on the key issues affecting investors.
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