Financial markets are digesting the news from the G20 meeting, the centerpiece being the pledge to grow the global economy by 2.1 per cent more over the next 5 years.
Now everyone knows that financial markets give the best and most telling instant assessment of events – be they the horrors of September 11, a shock data release, a policy change, a geopolitical development or some other news that is likely to change the course of economic events and with that, financial market prices.
The initial reaction to the G20 meeting is, well, underwhelming.
Market think, quite frankly, that the G20 pledge for faster growth is not worth the paper it’s written on, that it is lame, contains nothing new and who needs the G20 to tell governments that stronger growth is good, especially in the context of the hangover from the Great Recession.
Normally buoyed by stronger economic activity, the stock market futures for the US, UK and Europe are down a little this morning, as is the ASX200. Stronger growth? Phhtt. The Aussie dollar, so much a beneficiary of stronger world activity is all but unchanged, hovering around 0.8750. And the interest rates on government bonds are no more than one or two basis points away from where they were prior to the G20 announcements.
Don’t take my word for it, look at the financial market reaction to the G20 ‘initiatives’ and it’s a big, fat nothing. Thanks for coming.