Investors back in the hunt for risk after QE2 injection

ON THE US

Fidelity's Tom Stevenson on the impact of the mid-term elections and QE2

Last week’s mid-term elections and Federal Reserve committee meeting galvanised markets. As expected, the President was left licking his wounds, and the Fed launched a mighty new round of quantitative easing. After an indifferent initial reaction, investors were quickly back in the hunt for risk. QE2 is likely to be a lot more effective than the sceptics suggest. First, I think other banks will likely follow the Fed in order to prevent their own currencies from appreciating against a weakening dollar. Spending cuts and the New Year’s VAT hike will squeeze the UK, and Japan will not...