Financial sectors around the world breathe a sigh of relief
As the move to take Fannie Mae and Freddy Mac under direct control of the US authorities continues to sink in we have seen stock markets around the world react in a very positive manner. The bounce in the US has spread to the Far East and Europe with sharp rises reported across the financial sector. So is this the end of the troubles? Can we all sleep easy in our beds?
While to look at the stock markets you would assume that the credit crunch was over, this is certainly not the case. The move by the US government was one which they had little control over with the possibility of these two massive companies struggling under the weight of larger and larger mortgage write-offs and more US homeowners facing having their homes repossessed. So what will happen in the future?
Investors suggest that much of the action today, confined mainly to the financials and house builders in the UK market, has seen 'shorters' close out their positions which has forced share prices higher. The real direction of the market will become more apparent over the next couple of weeks when we hear more details as to the reasons for taking the US giants under government control.
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