Fed likely to do nothing amid inflation, recovery doubts

Looking only in the short term, two questions would be uppermost in every market player's mind. First is whether Friday's bounce can extend into this week and second is what the US Federal Reserve will do at this week's Federal Open Markets Committee (FOMC) meeting.

With oil having risen to US$32 per barrel on Friday, momentum plays a key role in debating these questions - optimists might speak of a significant reversal having occurred because Wall Street finally recorded a weekly gain, while pessimists might warn of "dead cat bounces".

Beyond these two short-term questions is the issue of the effectiveness of monetary stimulus - or its lack thereof. Reports indicate that Friday's rally in Europe was thanks to heavy hints from European Central Bank chief Mario Draghi of easing in March, while earlier on Friday, Japan and China stocks rallied after their central banks opened the monetary taps for the umpteenth time over the past few years.