By Edmund Conway, Economics Editor
Published: 8:03PM BST 14 Oct 2009
Things are looking up on Wall Street. Shrugging off warnings from economists that Britain and the US could fall victim to a W-shaped recession, markets hit their highest levels since the height of the crisis just over a year ago. London's benchmark FTSE 100 index rose by almost 2pc, while in Wall Street the Dow Jones Industrial Average pushed briefly above the psychologically important 10,000-point barrier.
The FTSE was 101.95 points higher at 5,256.10, more than reversing Tuesday's 1.1pc slide. The index has now rallied by 52pc since hitting a low in March, and is almost a fifth higher than at the start of the year. The Dow Jones was up by 1.1pc in late trading at 9979.74 points.
It came after the Office for National Statistics reported that although UK unemployment is still on the rise, recent months have seen the smallest increases for a year. It said the jobless total in the three months to August rose by 88,000 – smaller than any quarter since last summer, before the Lehman Brothers' collapse. The news helped the pound to a rare increase against other leading currencies, rising more than a cent against the dollar to $1.5953. However, the market's strength owed less to domestic news than an overarching sense that the global economy, having emerged from recession in the summer, is now powering ahead to a full-blooded recovery.
One theory, that growth will be delivered by emerging market powerhouses such as India and China, was underlined by new official data on Chinese exports. It showed that with Chinese investment continuing to increase, its appetite for commodities soared in recent months, while data on exports to neigh-bouring countries suggested that the broader Asian economy is gaining traction.
The news pushed shares in commodity producers sharply higher, among them Rio Tinto, Vedanta, BHP Billiton and oil groups BP and Shell.
International corporate news generated a further boost. JP Morgan's announcement that its profits rose by a phenomenal 581pc in the third quarter to $3.6bn (£2.3bn) lifted financial shares both in the US and the UK. Barclays, Royal Bank of Scotland and Lloyds Banking Group rose amid hopes that they too will report improved activity in recent months, when they update investors.
Analysts said that although the economic forecasts for the coming years, including those issued by the International Monetary Fund earlier this month, remain downbeat, earnings figures from leading companies tell a different story. Philip Gillett, trader at IG Index, said investors had been better-than-predicted third-quarter earnings news.
http://www.telegraph.co.uk/finance/markets/6329242/Dow-breaks-through-the-10000-barrier.html
Comment: Beware the bull market. Embrace the bear.
Sometimes I feel like everybody treats the market as such an abstract impersonal concept… and it is in a sense. It represents the supply and demand of money free for investing I suppose. But what about the pure heart of it - at the core of the stock market isn’t it just someone giving someone else money to do something with it in return for a portion of the hoped for profit?
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