“Feel good factor returns”
Overnight the UK government has hinted it may look to sell a portion of the debt it has taken on in the UK banking sector this has seen sterling surge 2 cents against USD to levels not seen since December 2008.
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Over in the US the feel good factor continues as The Treasury Secretary Geithner adds to the Growing Belief that we have turned the corner.
This, added to bullish global economic data and further comments from the US gave the Stock Markets a real boost, pushed the oil price up above $60 per barrel again and caused the Dollar to ease against the majors. Positive data included a rise in Japanese consumer confidence and better than expected export figures from the EU.
We then got ‘reasonable’ numbers from the US including strong trading performance from Lowes, a major company whose business is directly related to the house building industry. Financial stocks added to the positive sentiment following news that Goldman Sachs, Morgan Stanley and JP Morgan had applied to the Treasury for permission to repay their TARP borrowings.
Other overnight news includes China reducing their growth forecasts and instructing domestic steel producers to cut production immediately – they are currently churning out 25-30% more steel than they can use or export causing inventories to pile up.
The Reserve Bank of Australia gave a moderate assessment of their domestic situation and questioned the need for a further cut in their interest rates at the May meeting….. AUD strengthened slightly following an earlier dip on the Chinese steel directive…. and in a further sign of a global shift away from the US Dollar as a trading medium, Brazil and China have agreed to work towards using their currencies in trading transactions rather than the greenback.
So all round the feel good factor has returned but will this translate into a solid global recovery?
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