Equity markets continue to advance, as the world’s leaders gathered to propose and discuss new measures to stem the credit crisis.
The G-20 summit increased the regulatory limits imposed to the financial sector, mainly hedge funds. This comes, after a number of calls from Germany and France for such a bold move. Eventually, the blueprint for tighter rules was shaped by France, which should reshape the financial sector’s influence over the real economy. Some consider the current summit a big step forward, as the world’s leaders take a different stance than the one that led the thinking over last decade: free unregulated markets should drive the economy.
Moreover, the IMF’s funds were almost tripled, to $750 billion to save the (dying) emerging economies. Over the past few months, rumors surfaced that the IMF funds would be increased to $500 billion. During the pre-credit crisis period, the Bush administration forced the IMF to reduce its capital base, as everything appeared to be fine with the world economy.
Most shares headed higher in Asian equity markets. Banks continued the strong rally seen over the last period, as it seems U.S. regulators are preparing to change a number of accounting rules to make the balance sheets look healthier. Commodity stocks also rose, as crude oil bounced above the $50 benchmark. With tonight’s gains, the Nikkei has recovered every point lost since the beginning of the year, while most other markets are getting close to the breakeven line.
Overnight, the Nikkei rose 95.36 points (1.09%) to 8,815.14. The Australian S&P/Asx gained 47.40 points (1.29%) to 3,727.60.
Crude oil retraced some of the gains made recently. Crude oil for May delivery fell $0.60 to $52.00
Gold appears to be heading towards the $900 level. Bullion for immediate delivery fell $3.10 to $905.80.