EUROPEAN stocks are taking another battering this morning with the Dax down 285 points, or 2.9%, at the time of writing. A further fall in commodity prices seems to be the immediate trigger but that may in turn be due to concerns about growth in Asia; the Asian Development Bank cut its forecast for GDP growth this year by half a percentage point (from 6.3% to 5.8%). Its China growth forecast is the slowest rate since 1990.
Markets have been relatively immune to weak growth in past years because of the backstop provided by the monetary authorities; bad economic news was treated as good news because it would lead to lower rates or more quantitative easing. But what we have seen this summer is a sense that the authorities are not in control of events. The Chinese devaluation was not a huge move but the confusion surrounding it (and the slump in Chinese equities) created an impression of dithering. The Federal Reserve has not helped confidence either. It was not so much that the Fed failed to push up rates (probably the...Continue reading
from Economics http://ift.tt/1V7xhbH
via IFTTT
No comments:
Post a Comment