While you were sleeping: Investors pause

While you were sleeping: Investors pause

(BusinessDesk) March 23 - Global equities drifted overnight, reflecting the lack of a specific catalyst to head in any particular direction.

While the nuclear crisis in Japan appears to be abating, the situation at the crippled Fukushima Dai-ichi plant isn’t yet under control.

As for Libya and the Middle East, the endgame is far from decided. And there are cracks, though it’s hard to estimate how wide is the divide on what the West and how many other countries can be drawn to the no-fly zone coalition hope to achieve.

Shares in Europe slipped, with the Stoxx 600 index ending 0.2% lower. In the U.K., the FTSE 100 slid 0.4%, Germany’s DAX shed 0.5% and the CAC 40 in France lost 0.3%. Minor moves given the recent volatility.

In afternoon trading on Wall Street, there was a similar degree of wait-and-see. The Dow Jones Industrial Average was off 0.12%, the Standard & Poor’s 500 Index was 0.37% lower and the Nasdaq gave up 0.42%.

The CBOE Volatility Index has continued to retreat from its initial Japan-related surge, a sign that investors have come to terms with the current range of risks.

"Most investors are pretty safe now, and I suspect the VIX should continue to settle back down gradually," Jeffrey Davis, chief investment officer at Lee Munder Capital Group in Boston, told Reuters.

There are some concerns that Europe’s sovereign debt outlook will return to centre stage if Portugal’s government falls as expected later this week.

But European Central Bank officials seem determined, based on rising inflation, to push interest rates higher next month - a sign that at least some central bankers also have come to terms with issues related to Japan and geopolitical unrest.

That general optimism about the economy is even stronger in the U.S., where two more top Federal Reserve officials are singing the praises of the world’s biggest economy.

"The recovery seems to have established a firmer footing. I am seeing clearer signs of a virtuous cycle of growth," Cleveland Fed President Sandra Pianalto said in a speech at the University of Akron.

Dallas Fed President Richard Fisher, speaking in Frankfurt, Germany, said the U.S. recovery was gathering momentum and needs no further Fed support.

"The Fed has done enough, if not too much, and we should do no more. In my opinion no further accommodation is necessary after June," Fisher said, according to a Reuters report.

And a day after saying he saw buying opportunities in Japanese companies, Warren Buffett has said the U.S. economy is “getting better month by month”.

The bulls clearly are working hard to keep ahead of the game. Bloomberg is reporting that the ‘all-clear’ has been sounded and that markets have collectively shrugged off the recent series of Black Swan events.

Whether that proves true isn’t yet fully decided.

The potential fracturing of the no-fly zone coalition, and the still unclear objectives of the Libyan rebels suggests the transition to a freer society in the north African country is far from assured. That’s keeping oil from falling back too fast.

(BusinessDesk)

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