Spreadex Market Update
Asian stocks suffer
It is suspected that as a result of the strong rebound we enjoyed recently, the market will need time to consolidate before coming back.
The 14-day relative strength index, an indicator of market momentum, on the MSCI Asia Pacific Index reached 75 yesterday.
A level above 70 is considered by some investors as a sign the market is overbought.
Bank of England governor Mervyn King has revealed his concern over what he perceives as a worryingly risky betting culture at a time when Britain’s economy is still weak and banks are recovering from the financial crisis.
King believes that a combination of weak recovery and poor risk control is a disturbing situation.
This comes on top of the fact that banks will have to start raising large amounts of capital as fines for rigging the Libor benchmark and compensation to investors for mis-sold loan insurance.
The banks are facing a huge back-log of claims from the biggest mis-selling scandal in British banking history and the bill is likely to far exceed the 12 billion pounds they have already put aside.
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