Market commentary: Economic stimulus agreed by G-20 may boost growth by 2.1%

The main highlights from the Group of 20 Summit is that economic stimulus agreed by the G-20 members may boost growth by 2.1% by 2018. G-20 members have submitted plans to achieve the target of lifting the group’s collective GDP by an additional 2 percent over a five-year period. However, doubt remains whether individual members intend to fully implement the plan. Successfully implementing the plan would lead to the creation of millions of jobs across the globe.

US

The Standard & Poor’s 500 Index ended the day relatively flat halting a five day rally amid growing concern over slowing growth in Europe. The Index hit an all-time high on Wednesday; the S&P 500 had gained for five straight sessions, bringing its advance from a low in October to 9.5 percent.

Better-than-expected earnings from corporates and economic data are signaling consistent US economic growth. The Russell 2000 Index, which is representative of small cap companies, added 0.6 percent, continuing a 6 day rally.

Asia

The MSCI Asia Pacific Index slipped just 0.2 percent following data that show a cooling Chinese economy. Growth in industrial output declined more than expected to 7.7 percent for a year earlier, while fixed investment growth slumped to a 13-year low.

Still in this environment the Shanghai Composite Index still hovered around all-time highs and Japan’s Nikkei added 1.1 percent to a seven-year high.

Europe

Bank of England Governor Mark Carney downgraded UK growth and inflation forecasts yesterday. Economists adjusted forecasts to include slow global economic growth and stagnation in Europe.

Angela Merkel is resisting Mario Draghi’s bid for quantitive easing. The ECB President had previously indicated that he has the backing of policy makers, however, the German Chancellor is maintaining its stance of advocating fiscal discipline across the Euro Area.

Tension in Ukraine is once more on the rise as photographic evidence indicates that Russia is moving heavy weaponry into Ukraine. Russia denies any involvement in the conflict.

European stock rose this morning on signs that global authorities will be doing more to support economic growth.

Commodities

Brent Crude futures fell below $80 a barrel on Yesterday for the first time since 2010. Saudi Arabia appears unwilling to cut production in what is being interpreted as a price war with the United States.

Gold continues to edge lower and is trading at $1,160 per ounce.

Currencies

The US dollar held its ground against major currencies on the prospect of solid US economic growth.

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