Dr Shane Oliver - Weekly Market & Economic Update (Week Ending 1 Oct 10)
Headline developments of the past week • Concerns about problems in Europe returned to the fore over the last week with Moody’s downgrading Spain’s credit rating, ongoing issues regarding Irish banks, more pressure on bond yields in peripheral countries and protests about fiscal cutbacks. This all weighed on European share markets. • US Federal Reserve officials painted a mixed picture as to whether another round of quantitative easing is on the way. This was to be expected given that the Fed’s last meeting was only last week. We remain of the view though that if growth looks like remaining insufficient to reduce unemployment then Fed Chairman Ben Bernanke will find the support necessary for QE2, particularly with the Senate approving noted doves Janet Yellen and Sarah Bloom Raskin to the Fed Board. • Talk of a US/China trade war escalated with the US Congress voting in favour of legislation to place pressure on the Chinese over the value of the Renminbi. While the measure may add to the war of words between the US and China, its doubtful that it will pass the US Senate or be signed into law by President Obama. China is likely to respond by allowing further Renminbi appreciation, which should help defuse the issue over time. http://www.financeindonesia.org/showthread.php?201-Fundhouse-Market-Outlooks!&p=5908&viewfull=1#post5908 regards, D
