City Watch: Current optimism in stock markets could well be justified, says Brian Tora
- Credit: Archant
Remarkably, it has taken most of the three weeks since last I set out my thoughts on markets for the debt situation in America to be resolved.
This particular contretemps really did run to the wire. As a resolution looked increasingly achievable, so the dampening effect on sentiment was shaken off and shares resumed their upward trajectory. Not before time, though.
Other news has, by and large, been rather more encouraging. More positive economic data has emerged from China, while the broadening flow of third quarter results has so far failed to produce many unpleasant surprises. Even inflation appears to be moderating. No wonder the FTSE 100 index has been pushing ahead steadily for over a week now.
Of course, there are plenty of potential headwinds, though those likely to produce the biggest upsets seem to have moderated. Europe has drifted out of the headlines, with every indication that the economic corner has been turned with the single currency zone holding together. Even the UK looks to be doing rather better, with the IMF upgrading its expectations.
With the Footsie back up to within 5% of its all time high, perhaps some caution would be wise for the weeks ahead. After all, markets do not move in a straight line and the recovery that has taken place is probably due some consolidation. But with the disagreement on the US debt ceiling hopefully consigned to history, it could be a more optimistic approach to investment is justified.
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Of course, it is just when everything in the garden is looking rosy that the unexpected emerges from the undergrowth to trap the unwary, but for the time being I am content to feel more relaxed for the future.
: : Brian Tora is an associate with investment manager J M Finn & Co.
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