Evidence is mounting that the worst of the damage caused by a global financial crisis, which began with a U.S. housing market meltdown in 2007 and took a turn for the worse last year when U.S. bank Lehman Brothers collapsed, is now over.
Germany and France achieved a shock return to economic growth in the second quarter of the year, ending their recessions earlier than many policymakers and economists expected, but failed to drag the euro zone with them.
German gross domestic product rose by 0.3% in the second quarter, bringing an end to the country’s deepest recession since World War Two. French GDP also grew by 0.3% in the second quarter. The consensus predicted a 0.3% quarterly contraction in both countries.
The Federal Reserve said on Wednesday the U.S. economy was showing signs of levelling out two years after the onset of the deepest financial crisis in decades. It was the first time since August 2008 its statement had not characterized the economy as contracting or weakening.
The Bank of England struck a slightly more subdued tone in its quarterly inflation report on Wednesday, saying Britain’s recession would end early next year.
However despite this positive news, one must remain cautious with budget deficits spiralling under the weight of government stimulus packages and unemployment levels set to climb for some time.
UK and European markets have opened again in slightly positive territory and U.S futures are currently pointing to a slightly negative start when their markets open up this afternoon.
Sources: Reuters: BBC: Bloomberg: Lawshare: Deutsche Bank (db): Proquote: Financial Times: Wall Street Journal: CLSA: Sharescope: Market News. Capital Economics: CNBC: Wikipedia: GaveKal:
Please note this report provides a guide to some of the relevant areas that individual investors should consider discussing with an authorised adviser in relation to their specific circumstances, it does not constitute individual advice. As a result no action should be taken or refrained from being taken as a result of its content.
