Jaway Stainless Steel

Silence augurs good for European steel market

Just over a week after the opening European market maintained stoic silence. Operators are trying to understand market direction. It seems that prices are on same level than before holiday which is considered a good sign.

Hints of stimulus by US Federal Reserve spruces global stocks
Economic reports have been gloomy in the recent weeks with market confidence slumping sharply in the developed nations.

Although Jackson Hole turned out to be damp squib with Fed Chairman shying from enunciating any major policy measures he left the agenda open ended. The ambiguity was meaningful with a clear inkling for stimuli.

Mere insinuations of a nurturing effort provided relief to the beleaguered global stocks. All the major shares rose by 1-2%.

FTSE (Britain) - 0.9%
DAX (Germany)- 1.3%
CAC (France) - 1.6%
DOW Jones Industrial Futures- 0.8%
S&P 500- 0.8%

Recently the weakness in Germany and France the economic power houses in Europe had sent jitters in the EU nations as they are still grappling irrepressible debt crisis.

S&P had downwardly revised its growth forecast for EU nations to 1.7% in 2011 and 1.5% in 2012, down from estimates in July of 1.9% and 1.8% respectively.

Major cause for concern was decline in growth forecast in Germany and France. In Germany it fell to 2% from 2.5% a significant climb down from 3.3% in 2011. In France it came down to 1.7 % in 2011 and 1.5% in 2012 down from 1.9% and 1.8% respectively.

The continued sluggishness in job market in these economies with unemployment touching nearly 10 % in US the avenues for demand generation is getting squeezed.

Hence a stimuli package seems inevitable in the short run along with other equally drastic economic measures viz., QE3 to rein deflation. A booster dosage will catalyze activity in these markets and the global economy at large.