Tuesday, February 22, 2011

Global Market Weekly Review, 22-02-2011

Federal Reserve officials were slightly more optimistic about the U.S. economic outlook, but not enough to call an early end to their $600bln bond-buying program. Minutes of the Fed's policy-setting meeting Jan. 25-26 showed the FOMC expect U.S. GDP to increase between 3.4% and 3.9% this year compares with a November 2010 prediction the economy would expand between 3.0% and 3.6% in 2011. Though the economy looks a bit stronger, the FOMC expects the unemployment rate to remain at a high level between 8.8% and 9.0% at the end of 2011, even after January's decline to 9.0%.

Europe’s economy expanded less than economists forecast in 4Q10 as cold weather curbed German output and French growth unexpectedly stalled. Gross domestic product in the euro region rose 0.3% quarter on quarter (qoq), unchanged pace from 3Q10.

China’s central bank raised reserve requirements for lenders 10 days after boosting interest rates as Premier Wen Jiabao tackles accelerating inflation and the risk of asset bubbles in the fastest-growing major economy. Reserve ratios will increase 0.5%pt starting 24 Feb, the People’s Bank of China said.

Foreign direct investment in China climbed 23.4% yoy to US$10bn in Jan 2011 (15.6% in Dec 2010), adding to record inflows last year that are complicating Premier Wen Jiabao’s efforts to tame inflation in the world’s fastest-growing major economy. Economists had projected for an increase of 17.2%.

Source: ING Funds Berhad

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