Fragile Optimism In Global Markets

Published 06/14/2013, 07:46 AM
Updated 05/14/2017, 06:45 AM

It is one step back and one step forward in the financial markets these days. After being under pressure earlier in the week, U.S. stock markets rebounded Thursday on speculation that the Federal Reserve might not scale back quantitative easing as fast as has been speculated recently.

The yo-yo market of them all, the Japanese stock market, has rebounded strongly Friday morning – up nearly 4% – after a major sell-off Thursday. Over the past couple of weeks, the Nikkei dropped more than 20%.

The overall sentiment in the financial markets is hence positive but still very fragile. Focus remains on the outlook for monetary policy, in particular in Japan and the US.

In the currency markets, the yen is slightly weaker after some days of significant strengthening. For the yen the story continues to be whether or not the Bank of Japan will remain committed to its new 2% inflation target.

The return of optimism in the global markets has also helped lift commodities, but again it looks fairly fragile. Investors are clearly uncertain about the direction of the global markets.

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