Analysis

After a strong performance from most equity markets since the lows of March 2009, it is reasonable to expect a degree of consolidation in the short term.

Government's scheme divides sector predictions on future buy-ups despite programme creating extra demand for asset class

Pre credit crunch, the Chinese economy had been expanding at a tremendous rate; China's GDP growth in the mid-teens combined with booming housing and stock markets clearly signalled a case of overheating.

Notwithstanding the recent pullback, equities have rebounded sharply from their lows in March, with economic data indicating a moderation in the pace of GDP decline, while sentiment towards risk assets has improved considerably.

While it is too early to be confident in the timing of an economic recovery in Japan, there are at least some signs that the situation is improving significantly.

A near 30% rally from the lows of early March to the peak on 1st June has been characterised by a fierce debate between investors over cyclicals versus defensives. We feel this misses the point of the rally entirely.

Bric economies have enjoyed a strong rebound since markets started to recover, but for markets to move decisively upwards from current levels, we will need more evidence of bottoming out of developed world economic data and for upwards revisions to start...

Having spent the past six weeks trading in a tight range of 100 points around 4,400, the UK FTSE 100 has recently fallen back to its end of April levels.

Equity markets stabilised in March and rallies witnessed since have reflected investors' belief the combined actions of Western central banks and governments have prevented a horrendous collapse in the global banking and credit systems.

By building up demand, government stimulus packages focusing on infrastructure are continuing to play a significant role for commodities around the world. China and the US are leading this trend.