A spate of good news have lent a good support to global markets. Nigel Chalk of Barclays admitted that most market expectations have been met, but the rally will be durable if further clarity on Europe emerges.
A spate of good news have lent a good support to global markets. ECB had announced its bond purchasing programme, followed by German court approval of European Financial Stability Facility, followed by Federal Reserve's announcement of its open-ended purchase programme for mortgage-backed securities. Global markets have reacted positively to these developments. Speaking to CNBC-TV18 about these global developments, Nigel Chalk of Barclays admitted that most market expectations have been met, but the rally will be durable if further clarity on Europe emerges .
Below is an edited transcript of Barclay's interview on CNBC-TV18
No. It is still a little bit happy. The markets have seen over the past few weeks pretty much got everything they were looking for. You had the ECB reacting, offering its bond purchase programme; you had the German Constitutional Court approving the European Financial Stability Facility (EFSF) European Stability Mechanism (ESM); and then yesterday you had the Federal Reserve announcing its open-ended purchase programme for mortgage-backed securities. Plus a rate guidance that it's pushed out even further into 2015. You see some of the tail risks in Europe as being curtailed. It is not that risk isn't still there. You still have number of steps in the chain. We haven't yet seen Spain request assistance from the euro group. We haven't yet heard from the Greek Troika Report as to what is going to happen in Greece, but things do seem to be moving in a pretty positive direction.
Q: So do you see an extension of the risk on rally that has been in place over the last few months?
A: I think it looks like it’s going to have some legs to continue and you are seeing that in EM Asia. You are seeing currencies in EM Asia improving. But there is one outstanding question. What’s happening to growth and I think that’s a real issue in Europe. We are seeing it very difficult for the European economies to grow. We have recently downgraded our growth forecast in China. We now expect China's growth next year to be around 6.7% which will mean less demand from China for Asian exports. So there is a question relative to growth, but I think in terms of financial markets they seem relatively risk on.
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