The first few months of 2010 have seen global stock indices surging to their highest levels since 2008. With many investors still wary about the effects of recession, what is keeping the stock markets going?
The month of March saw indices around the world hit an 18-month high – despite continuing concerns about the state of the global economy.
By the afternoon of 15 April the Dow was above 11,100 and the FTSE had passed 5800 - their highest levels in 21 months. So what is pushing stock markets upwards when overall sentiment seems to be down?
What is driving the rally?
This sudden ascent may simply be renewed confidence in the state of the global economy – but there are other factors at play. In the case of the FTSE the falling price of sterling has played a big part. As the price of sterling has dropped, UK companies have become less expensive and therefore more attractive – especially to European investors with the advantage of a comparatively strong euro.
On a global scale, while some key indicators have remained ambiguous, others such as recent manufacturing reports from China and the US, have indicated a strengthening rate of global expansion. This has spurred a rally among industrial firms which are highly cyclical, which has in turn bolstered the recent equity rally.
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Updated: 15/04/10