Markets show signs of stabilizing

Posted by Ravi Gulati | Posted in Economy & Markets | Posted on 05-02-2014

………….Stocks plunged Monday after data showed the U.S. manufacturing sector continued to expand in January but at a slower pace than expected.

Other data showed a similar performance for China’s manufacturing sector, which added to anxieties about emerging markets.

These negative developments come at a time when the U.S. Federal Reserve is cutting back on a key stimulus measure —bond purchases that have kept long-term rates low and supported a strong rally on stock markets.

The withdrawal of stimulus is also proving to be difficult for emerging markets that had benefited from a steady inflow of cheap money courtesy of Fed easing. Now, they’re being hit with steady outflows of that money, which in turn has pressured currencies and raised worries that economic problems in emerging countries could spread to developed markets.

Markets show signs of stabilizing | Toronto Star.