Global markets soared today on the back of surprise interest rates cut from the Bank of China and comments from the ECB that it would take all necessary measures to support a flagging Eurozone economy. The Dow Jones Industrial average and the S&P 500 both hit all time highs which is being seen as a huge positive. Many believe that the measures taken by both the Central banks seem to be a coordinated effort towards providing stimulus to the global financial markets. It is imperative to state that the Bank Of Japan had very recently boosted its stimulus program which had provided an impetus to the world financial markets.
It is important to remember that the Federal Reserve had ended its quantitative easing program in October and stays on course towards hiking short term interest rates by as early as next year. The divergent policy stances employed by global central banks has proved to be a bane for the dollar which has hit fresh multi-year highs against all major currencies in the world. Analysts on the street believe that Global central banks continue to remain the driving force behind the rally being witnessed in financial markets which has seen risky asset classes like stocks notching multi-year highs. Many point out, that this risk-on rally began when the federal reserve introduced quantitative easing in 2009 and there seems to be no end in sight at free flow of cheap capital at the current moment.
Though, this has been a momentous bull market, many believe that traders need to be a little cautious as fundamentals of most global economies remain weak and any amount of stimulus is not helping stop the current downturn in growth metrics which should be a huge cause for concern going forward.