Investment Outlook - October 2012

A monthly round-up of global and local market trends

Investment review

Central banks take the strain

Global equity markets have enjoyed a solid run through the summer as central banks around the world have stepped up their efforts against the global headwinds of sluggish growth, low confidence and the continued uncertainty over the outlook for the eurozone.

World

The Federal Reserve exceeded market expectations by announcing its plans for a third round of quantitative easing (QE) and reaffirmed that it would continue its ultra loose monetary policy until mid-2015. In Europe, the European Central Bank (ECB) helped lower bond yields in Italy and Spain as President Mario Draghi stated the bank would purchase bonds of peripheral nations on a large scale, subject to governments agreeing to economic reforms and strict conditions. The potential stimulus has succeeded in improving investor sentiment and restored some confidence in the financial markets. Japan also