Tag Archives: DAX

Global Markets Rally on News of US Budget Deal Shaping Up

News, , ,

Optimism prevailed on Wednesday on the world markets as news of an agreement to avoid the US ‘fiscal cliff’ reached investors. Political leaders in the US need to reach an agreement before January 1st, when across-the-board budget cuts and tax increases will go into effect automatically. Economists and other analysts fear that these automatic measures, which are in place to cut the US budget deficit, will send the US economy back into recession.

After lack of progress for weeks between Democratic and Republican lawmakers, several key players in the “fiscal cliff” negotiations have made moves towards a compromise, relieving the fear investors have had that a US recession was imminent, and sending global markets on a rally.

The FTSE 100 in Britain rose by 0.3 percent to 5,954.05. The DAX in Germany increased by 0.2 percent to 7,665.20. In France the CAC-40 rose by 0.3 percent to 3,659.05. Wall Street in New York will be well-placed to open higher, while Dow Jones industrial futures went up by 0.1 percent and S&P 500 futures rose slightly to 1,441.70.
 

How Widespread Is This Economic Decline?

Economy, , , ,

Recession HereThe Federal Reserve’s announcement that it would maintain interest rates very low for at least two years indicates that the Fed expects a real recession of at least a year.

Meanwhile concerns about the global economy cut off Europe’s stock market rally and has not stopped the Wall Street decline as of this morning. In Germany, the DAX fell 1 percent to 5854 while the English FTSE 100 index of top English shares fell by .7 percent to 5124. France’s CAC-40 dropped by 1.9 percent to 1153.

Another sign rocked the financial community when the U.S. Government released a report that the U.S. economy grew much less than expected during the first half of 2011. This indicates a significantly greater chance of recession.

Another major market worry is the European Debt Crisis. Italy and Spain may well need bailouts and investors have ceased to purchase their bonds. The ECB (European Central Bank) has begun buying these countries’ bonds worth billions of Euros. This action has helped alleviate the high yields on Italian and Spanish bonds which dropped to approximately 5%.

What we see is an across the board fall, in not only the American stock markets, but also across the European markets. This is consistent with a worldwide recession starting in American and Europe and spreading to Asia and the Middle East.