Financial markets are an important indicator of the health of
the global economy. Although fallible, markets provide useful
signals on investor sentiment and on expected valuations of the
assets traded.
Here is our reading of recent financial market developments.
Since the sell-off in equities last October, the European
Central Bank has launched a round of Quantitative Easing and
expectations for rate rises have been pushed back in the US and UK.
This has provided a very good backdrop for equities.
The ECB's QE programme has boosted prices of risk assets,
especially European equities. Germany has been the best performing
major equity market, returning 38% since October. French and Dutch
equities have also returned more than 30%. In the crisis-stricken
periphery, Irish, Italian, Spanish and Portuguese equities have
seen big rallies.
