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The US Federal Reserve has apparently handed the market stimulus baton to the Bank of Japan

John Robertson

PortfolioDirect

The US Federal Reserve has apparently handed the market stimulus baton to the Bank of Japan. The more aggressive asset buying program announced late in the Australian trading day on Friday had an immediate positive effect on resource sector prices. Nonetheless, the response later in London and New York seemed to imply scepticism about the impact of the measures on global growth. In London, the majority of mining stocks in the FTSE350, including BHP Billiton, fell in price even as the index rose by 1.3%. Attempts at reflation by the central banks operate on the prices of financial assets but less directly on the real economies on which the resources sector depends. The renewed Japanese efforts are also a concession that previous attempts to spur growth were falling short and that more was needed if growth was to strengthen. Neither the Japanese nor European monetary measures are doing anything to affect the productive capacity of their respective economies. The next chance of an initiative on that front will come from the upcoming G20 meeting.


John Robertson
John Robertson
PortfolioDirect

John Robertson is Chief Investment Strategist for PortfolioDirect a provider of resource sector investment stock ratings and portfolio strategies for mining and oil and gas investors. He has worked as a policy economist, corporate business...

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