Up or Down for the International Stock Markets?

Up or Down for the International Stock Markets

?

At the beginning of November 2010, in an attempt to boost the anaemic US economy, the US Federal Reserve announced that it would buy $600bn of government bonds by mid-2011.

According to spread betting company PipTrade, "Whilst the markets were initially volatile they settled fairly quickly as analysts had already priced in an injection of around $500bn. Nevertheless, the modest rise after the announcement saw the NASDAQ 100 finish at its highest mark since June 2008 and the S&P 500 closed at a six month high."

The Federal Reserve's move came as global manufacturing activity accelerated for the first time in six months. This created a situation in which an already improving global economy was given sharp monetary stimulus.

European data has also improved with Eurozone manufacturers boosting their output in October at a faster pace than previously thought. However the gap between member countries has remained and the UK's manufacturing sector slowed more than expected.

There was, however, positive jobs news. The important US non-farm payrolls count rose by 151,000 in October, more than double the expected increase. This further supported the gains seen in the stock markets. Analysts had forecast a gain of 60,000 jobs in October. Despite the positive news, US unemployment is still over 9.5% and that acts as a reminder that stronger jobs growth is needed.

Where next for the leading stock markets? According to a recent City Index report, "The UK's FTSE 100 has held firmly above the important 5660 level and this in turn has helped lift the index higher. We have seen the odd dip in momentum but we are seeing a bullish trend and the index looks to be headed for the 5900 level.

"The FTSE currently appears to be on route for the next key level of 6050-6117. Provided short-term price support at 5748 is not breached, we should continue to see positive sentiment, although pullbacks will most likely take place along the way.

Looking at the US, the same report also stated that, with the Federal Reserve's announcement, "the expectation of volatility did help to create a move to the upside. The Dow is now clearly above the 11250 mark and could be moving towards 11250-11705 over the coming weeks.

"Although several indicators are pointing to higher prices, as with other indices, certain pullbacks are only to be expected. The current move above 10719 suggests an extended ABCD pattern and that could mean sizeable pullbacks. The 11215 level should be watched for any breaks to the downside."

With financial spread betting you can lose more than you initially invested. Financial spread betting carries a high level of risk to your capital. Ensure that spread betting matches your investment objectives. Familiarise yourself with the risks involved. Where necessary, seek independent advice.

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