Premier Wen Jiabao’s recent statement that China does indeed have room to add stimulus has buoyed Asian stocks for a fifth consecutive day, while regional bond risks have fallen to their lowest rate in over a year.
Europe’s equity futures have also advanced, as the court prepares for a final verdict regarding Germany’s place in a Eurozone bailout fund.
Yesterday, Wen confirmed that China has “ample” opportunity to use fiscal and monetary policy to meet growth markets, while tomorrow marks the end of a two-day meeting between Fed Chairman Ben S. Bernanke and his colleagues and the final decision regarding their contribution to asset purchases. Germany also plays a significant role in the events as the country’s Federal Constitutional Court will now announce whether it will participate in the European Stability Mechanism.
Hiroichi Nishi of SMBC Nikko Securities Inc. explained:
“The market is getting confident that governments won’t let economies get worse, as expectations are mounting in the U.S. for more monetary easing and China expands public investment. At the same time, Europe is making progress, even though it’s not speedy.”