The IMF forecasted that the global economy’s growth is slow and would remain subdued this year, while there are chances of better growth in the year 2014. As for the Eurozone, it would remain in recession in 2013 as the unemployment and consumer spending concerns are still there; however, it is expected that the Eurozone economy would grow by 1% next year.
The FTSE 100 index gained around 80 points on Tuesday taking it to the 6483 level; whereas the euro plunged by more than 110 points against the U.S dollar down to 1.2760 from 1.2880 on Tuesday. This drastic change was witnessed as the credit rating company S&P cut the credit rating for Italy to BBB from BBB+. More importantly, the executive board member of ECB, Asmussen, said that he would not rule out the implementation of another LTRO and more measures could be taken whether they are standard or non-standard, in order to make the situation better.
Therefore, the investors took this seriously and went short on Euro as the concerns still remain there in the eurozone economy while IMF also ratifying them the same day.
U.S. Stocks gain as IMF Forecasts
The U.S. stock market remained in control of the bulls on Tuesday as the S&P 500 index gained to test the resistance level area of 1650 and is currently moving at around 1644 area. On the same side, the Dow Jones index followed the same trend where more than 80 points gain was seen yesterday as the market is nearing to its all time high. It closed above the level of 15300, where 15340 is the resistance level, closing above which could take it to its all time high in 15400’s, technically.
Also, the investor confidence in the market improved as the IMF predicted that the U.S economy could grow as much as 2.75% in 2014 against its current growth of nearly 1.75% annually.
Nikkei Soars on new Japanese Government Plans
The Nikkei index gained on Tuesday after the Japanese government plans to use a separate measure of inflation which may take the time to get the Japanese economy out of deflation. Therefore, the room for easing measures is still there in the economy where pumping more money in the economy could get things done for the economy. And as a result, the stock market gained as investors see the potential of businesses flourishing in the near future.