Hardship leads to opportunity
March, 2009 marked a low point in the global economy including world stocks. Gains have been great for stock exchanges since then though economies have been sluggish worldwide. The Associated Press reports that a lot of markets had gains of 50 percent or better from March to the end of the year. The FTSE 100 Index of leading British stocks gained 15.02 points or 0.3 percent at the close of trading December 31st. That mark means the FTSE 100 Index gained 22 percent for the year. France’s CAC -40 yielded similar gains closing out the year with a 23 percent gain. The German DAX did better with a 24 percent annual gain, though it lost a point on the last day of trading. The bull market gains have been fueled by depressed stock prices due to the global recession. Lower prices got investors to look for bargains, and as the recession slowed those stocks yielded high returns.
Asian markets set the pace for the year
The U.S Dow Jones industrial average is expected to post an approximate 20 percent gain for the year. U.S. gains along with Europe’s impressive gains would be a heck of a year, if circumstances weren’t bad. Those gains were outpaced with ease by Asian markets. China’s Shanghai index and Hong Kong’s Hang Seng rose 80 percent and 50 percent respectively. Analysts are predicting strong growth to perpetuate in both markets for the next year and beyond.
A sobering historical perspective
2009 yielded tremendous growth from where it started to where it finished. Investors can stay happy if they have only a short term view. A sobering perspective can be arrived at by making a much broader analysis. Though the U.S. and Europe gained considerably for this year, they are down in the stock market even more from a decade ago. Europe is down 22 percent from a decade ago even when factoring in the 22 percent gain for this past year. France’s CAC-40 is a similar story down 35 percent from ten years ago. Germany did better, as the DAX was only down 14 percent from a decade ago.
Where to go from here
Investors and analysts are trying to get a clearer picture of what will happen with the New Year. They wrangle with the question of whether the stock rally can continue or if it has reached its zenith and will level off to more moderate gains. Many point out currency exchange rates as a possible route to better than average gains in 2010. Currency exchange rates have remained relatively steady from start to finish for the year. An indicator has been the rise in the U.S. dollar at the end of the year. The dollar has been up .3 percent in London at the end of the year. Optimism is from investors thinking the U.S. Federal reserve will start raising interest rates to head off inflation as the U.S. economy keeps showing signs of recovery. U.S. rates for 2009 were at record lows, and had nowhere to go but up in 2010, which makes the dollar a good investment over the next year.
