Quantitative Easing

Interim fixes push FTSE 100 to over 7,000

“A series of temporary fixes to worrisome global issues has pushed the FTSE 100 above the psychologically important 7,000 mark, but it is possible that the nuts and bolts will weaken again and the wheels will fall off during recovery.

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Letters, conferences and more on hedge funds in the second quarter of 2021

Mining stocks: biggest gains today on the FTSE 100

The agreement to settle a domestic bond payment due to the crisis that hit the Chinese real estate group Evergrande, seems to have calmed the nerves of investors and stopped the immediate contagion to other sectors. Mining stocks, which were among the hardest hit on Monday when fears of an impending company collapse mounted, are among the biggest gains today on the FTSE 100. Concerns about the immediate impact on demand for raw materials for construction has subsided, but with yet another debt payment due by Evergrande on a foreign bond tomorrow, the myriad problems facing the group are far from over.

In the UK, the latest supply chain crisis has been addressed as the government stepped in to pay the operating costs of a large CO2 producer. CF Industries has closed two sites that produce 60% of the UK’s commercial carbon dioxide supply, due to soaring gas prices. Again, this may just be a scam with just three weeks of guaranteed financial support and now energy regulator OFGEM is warning more energy providers could go to the wall. It is clear that the crisis in the energy sector is far from over, and companies will be forced to absorb costs, hit margins or pass the increases on to customers, fueling inflation fears.

With supply chain weaknesses exposed and concerns growing about the spread of a possible fall in house prices in China, all eyes are on the Federal Reserve, in hopes that the central bank will mitigate the blow of any monetary tightening. Even though the Federal Open Markets Committee is expected to declare that there is talk of easing the pedal on quantitative easing towards the end of the year, no firm decision is expected. There is a growing consensus that inflation may not be as transitory as previously thought, but a gloomy employment situation, stubbornly high covid infection rates, and concerns about the slowing economic growth are likely to stop rapid acceleration away from the era of super cheap money. ‘

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