Will QE3 trigger major new bull run in equities?

Global markets rallied at the end of last week as the Federal Reserve unleashed QE3, prompting some investors to call the start of the next major bull market in equities.

Previous rounds of QE have seen short-lived rises in stock markets but, combined with the ECB’s bond buying programme announced the week before, some commentators expect to see a prolonger equity rally. Ben Bernanke announced the Fed will buy $40bn of additional mortgage-backed securities per month as well as keeping the federal funds rate “exceptionally low” until 2015. Coupled with Operation Twist, it is hoped this will strengthen the housing market, and, crucially, boost employment and economic growth. Economists have voiced their surprise at the extent of this third round of open-end...