[B]Daily Market Update - 01.03.2012
FED’s Bernanke turned
markets upside down[/B]
The quantitative easing markets had hoped for were not included in FED’s Ben Bernanke statement to the Financial Committee in Congress yesterday. This had an immediate effect. Shares, bonds, oil prices and gold dropped dramatically in minutes. The gold prices fall 100 dollar to recover to 1721 during trading in Asia. Dow Jones had to give up its flirt with the 13 000 level and ended on 12 952. The dollar was strongly strengthened. The Euro fall back, but has recovered from bottom levels. Euro/USD is in the morning trade at 1.3345. USD/JPY at 81,01 with Yen falling further.
Bullish global markets which had been looking forward to Bernanke giving signals for a possible third round of quantitative easing with the Federal Reserve letting more funds into the money market, were disappointed. Bernanke repeated his sober message of moderate economic growth. BNP in the US increased in fourth quarter to 3 %. 2,8 % was expected. Quantitative easing would have given global markets fighting its way out if recession, an extra impetus.
The effects of Bernanke disappointing markets are probably not, however, going to be long lasting. News from Japan reveals stronger investments and Chinese manufacturing numbers for the last three months indicate that the growth problems in Europe and US are going to be temporary. The new strongly emerging markets keep their appetite for oil and metals. Oil prices have recovered and NYMEX is back at 107. Brent trading at 122,25.
After several bullish weeks Asian markets were marginally down this morning pointing towards a possible correction in world equity markets after big gains. It is Also worth noticing that China has reduced their US treasury bill holdings to proportionally its lowest level in years. This has been a gradual process. China has for a long time been aware of the vulnerability its big exposure in US treasury bills And bonds have created. It has therefore obviously been a deliberate policy to scale down this exposure to more balanced and controllable level.