Super Fitness Health BlogFactors Affecting the Global Stock Market Recovery
At the start of November, the US Federal Reserve said it would buy $600bn more in government bonds by the middle of 2011 and this has boosted the stock markets. Stocks in general benefit because of the impact of a huge wave of liquidity flowing into the financial system.
According to a recent City Index report, stock markets have continued to push higher, going past major hurdles along the way. “It now appears that significant price levels could well be within sight if we can see the current positive momentum continue into the near future” it read.
“There is however concern within the financial markets that sudden falls may take place if any negative data disrupts the upbeat sentiment.”
Around the time of the Federal Reserve announcement, the Global Manufacturing PMI rose in October to 53.7 from 52.5 in September. With the PMI data, any score above 50 indicates growth and the above data shows the PMI’s sixteenth month above the 50 mark. All-in-all, another positive result.
It’s now more than two years since the credit crisis deepened and Lehman Brothers filed for bankruptcy. However the economic indicators are looking favourable and so do we still need $600bn in liquidity? This is not an easy question to answer but, with China’s economy still growing rapidly, the extra stimulus may not be needed.
According to a recent Financial Spread report, the world’s second largest economy continues to produce positive economic data. “It’s little wonder that China is the motor of global growth at the moment. Retail sales rose by an incredible 18.6% in 2010 and industrial production has risen by a rather staggering 16.1%” it read.
The problem for CFDs investors is whether this huge growth is too much and this may be the case as some prices are getting out of control. Chinese inflation figures have come in much higher than expected and the Bank of China may have to raise interest rates sooner rather than later. If China’s inflation gets out of control this could add fuel to the fire.”
When trading the stock markets with CFDs and/or financial spread trading you can lose more than your initial investment. Spread trading and CFD trading carry a high level of risk, so before trading, ensure that they match your investment objectives. Where necessary, please seek independent financial advice.
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