Bullish traders gave it all they had last week, fighting back, pushing the major stock indices higher. The rebound occurred on Tuesday, following Citigroup’s statement mentioning that the financial institution experienced profits during the first two months of 2009. Bears were pushed aside during the session as a situation of short covering and buybacks drove the indices to one of their best intraday rallies since the end of 2008.
While it is still too early to determine a change of trend, all eyes are now focusing on the financial sector, especially as banks are still discouraged to lend out money due to fears that they will need the excess cash to cover future write-offs. As Bernanke put it last week, stabilization in the sector will help the overall economy and could lead to a market turnaround towards the end of the year.
On the global markets the U.S rally sparked equity buying across the board. The FTSE closed the week higher by 6.31%, while the Nikkei finished with weekly gains of 5.52%. The S&P500 increased by a double digit number, closing the week with gains of 10.71%.
From a fundamental point of view, not much has really changed. Economic data is continuing to drag down consumer confidence, while central banks are trying to find new solutions to battle economic contraction and ease the credit crunch. According to current estimates, the Obama administration is expected to increase the budget deficit to $1.2 trillion in 2009, to help the economy crawl out of its dire state.
Same Old G20
Global leaders met over the weekend at the G20 meeting in England, in an effort to resolve the current economic crisis, using coordinated and comprehensive actions. While opinions were thrown all around, the leaders managed to agree that a “bad bank” is required to buy up all the toxic assets from banks and that Eastern European countries need to receive top priority, in order to prevent protectionism, keeping an open trade market.
Pictures are easier to digest than words
Recent market activities together with ongoing efforts by officials have now led investors to question whether the stock markets are bottoming out. While it is still too early to determine a change of trend, one can see from last week’s trading sessions that there was a clear shift in sentiment. From a technical point of view the global indices have bounced back but are now approaching major resistance. A key factor to the current recovery lies within the financial sector. Stability will lead to easing credit, allowing the economy to run its normal course, heading back to healthy economic growth.
XLF - Daily Chart
S&P500 Daily Chart
S&P500 Weekly Chart
FTSE- Daily Chart
Nikkei - Daily Chart
Dax - Daily Chart
USD- Weekly Chart
While it is still too early to determine a change of trend, all eyes are now focusing on the financial sector, especially as banks are still discouraged to lend out money due to fears that they will need the excess cash to cover future write-offs. As Bernanke put it last week, stabilization in the sector will help the overall economy and could lead to a market turnaround towards the end of the year.
On the global markets the U.S rally sparked equity buying across the board. The FTSE closed the week higher by 6.31%, while the Nikkei finished with weekly gains of 5.52%. The S&P500 increased by a double digit number, closing the week with gains of 10.71%.
From a fundamental point of view, not much has really changed. Economic data is continuing to drag down consumer confidence, while central banks are trying to find new solutions to battle economic contraction and ease the credit crunch. According to current estimates, the Obama administration is expected to increase the budget deficit to $1.2 trillion in 2009, to help the economy crawl out of its dire state.
Same Old G20
Global leaders met over the weekend at the G20 meeting in England, in an effort to resolve the current economic crisis, using coordinated and comprehensive actions. While opinions were thrown all around, the leaders managed to agree that a “bad bank” is required to buy up all the toxic assets from banks and that Eastern European countries need to receive top priority, in order to prevent protectionism, keeping an open trade market.
Pictures are easier to digest than words
Recent market activities together with ongoing efforts by officials have now led investors to question whether the stock markets are bottoming out. While it is still too early to determine a change of trend, one can see from last week’s trading sessions that there was a clear shift in sentiment. From a technical point of view the global indices have bounced back but are now approaching major resistance. A key factor to the current recovery lies within the financial sector. Stability will lead to easing credit, allowing the economy to run its normal course, heading back to healthy economic growth.
XLF - Daily Chart
S&P500 Daily Chart
S&P500 Weekly Chart
FTSE- Daily Chart
Nikkei - Daily Chart
Dax - Daily Chart
USD- Weekly Chart
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