Markets appeared to pause for breath yesterday on a low volume days where there was not too much news. The economic data that was released was better, but the market took little response.
This week we have seen better-than-expected gains in U.S. housing prices, an increase in durable goods orders and consumer confidence, lending new credence to the view that the economy is emerging from recession. The question is how much of this information is already priced into the equity and commodity markets.
Stirring concerns over the growth of the world’s No. 2 energy consumer, the Chinese cabinet said on Wednesday it would take steps to curb redundant investment and overcapacity in industries ranging from steel to wind power equipment. There are concerns about the pace of economic recovery in China, and a likely clampdown on lending and plans to curtail overcapacity, which has prompted falls in equities markets in Shanghai, Hong Kong and Japan.
The decision came amid fears that China’s $585 billion stimulus plan and a surge in new lending in the first half could trigger wasteful investment and a new crop of bad loans. It followed Premier Wen Jiabao’s remarks that the economy faces new difficulties, including trouble boosting domestic consumption.
Eyes today will now be on the U.S. GDP and jobless claims data, as well as German consumer sentiment.
The UK market has opened in slightly positive territory and the European markets are currently flat. U.S futures markets are pointing to a flat opening when their markets resume trading this afternoon.
Today the markets await US durable good and US new homes data. European markets are currently trading in flat territory.
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.
