Spreadex Market Update

Investors paused for breath this morning



Investors paused for breath this morning as the sharp rally which started on Wednesday caused by the Fed’s decision to maintain stimulus measures began to lose steam. Clearly with many markets trading at such high levels, investors are starting to wonder if the present valuation of equities is too high and maybe taking a step back from the markets and awaiting the next economic disaster could provide a better buying opportunity.

Even Gold is failing to maintain its attractiveness today, despite continued dollar weakness. It seems the current price of the precious metal is too high to justify hedging against the risk of rising inflation as a result of the Fed’s ultra-loose monetary policy measures.

Nevertheless, it has been a very optimistic week for equities. The news that Lawrence Summers, who many economists believed would be most likely to begin tapering stimulus measures, will not be running to head the Fed and of course the news that the dreaded tapering will not happen at the moment bolstered sentiment. Furthermore, since the Fed also failed to provide a specific calendar for reductions, investors can bask in the knowledge that the lifeline supporting global markets will continue for a bit longer.

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