All eyes on US data out this week

WHATEVER your view of the effectiveness of central bank action on the economy, or your take on the brand of economics which claims that higher oil prices are better for the economy, earnings and stocks, there's no denying that both have had a positive effect on equities these past two to three weeks.

The Straits Times Index, which in January and February lost 10 per cent because of uncertainty over the economic outlook brought on by a possible hard landing in China and collapsing oil prices, has recovered all of this loss and moved into positive territory for the year not because the economic outlook has suddenly improved but because central banks have stepped up their stimulative measures and oil has bounced.

It should also be noted that the policies pursued by these banks are now converging instead of diverging as was the case at the start of the year when the US Federal Reserve was assumed to be on a tightening path when all other banks were loosening.