Equities bounce back on QE hopes

Stocks are higher this morning after comments from a prominent US central banker indicated the Fed is unlikely to reduce its stimulus package next month.

Traders bought on the dip this morning as Dennis Lockhart, president of the Federal Reserve, stated that poor manufacturing figures show the US economy has not fully recovered, and that for this reason the quantitative easing programme is not likely to be curtailed any time soon. The drop in global equity markets last month was driven by fears that the Federal Reserve might begin tapering its stimulus package, but Mr Lockhart’s comments could help equity benchmarks recoup recent losses.

Overnight, the Reserve Bank of Australia kept interest rates unchanged at 2.75%, which is a record low. This shows the Australian central bank is committed to loose monetary policy, which it hopes will encourage domestic growth.

The UK revealed a construction purchasing managers index (PMI) of 50.8 in May, compared with 49.4 in April. The rise provided a boost to UK equities, as a reading above 50.0 indicates an expansion in the sector.

At 3pm the US will announce the latest IBD/TIPP economic optimism index, and analysts are expecting a reading of 50.2. If we see a higher figure than this, it could spur stocks upwards.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen. 79% van de retailbeleggers lijdt verlies op de handel in CFD’s met deze aanbieder.
Het is belangrijk dat u goed begrijpt hoe CFD's werken en dat u nagaat of u zich het hoge risico op verlies kunt permitteren.
CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen.