16
Sep
Shares rise on renewed optimism
European and Asian shares have risen strongly while Wall Street
built on on Tuesday's gains, after the latest signs of US economic
recovery.
The UK's FTSE 100 index was up 1.5% in mid-afternoon trade,
while Japan's Nikkei ended up 0.5%.
The US Dow Jones added 0.3% after Tuesday's 0.6% gains took it
to its highest level since October 2008.
Investor sentiment was boosted by jumps in US retail sales in
August and upbeat comments from the Federal Reserve.
The Fed chairman Ben Bernanke, heartened investors, saying the
US recession was now "very likely over".
US monthly trade deficit figures - which narrowed in May, but
then widened in June and July - have been seen by analysts as a
signal that the US recession was nearing its end.
The FTSE's rise was mirrored across Europe, where Germany's Dax
had added 1.2% and France's Cac was up 1.5%.
The main Australian share index had earlier closed up 2.2%,
while Hong Kong's Hang Seng added 1.8% and India's Sensex advanced
0.8%.
Cautious note
Official data showing that US retail sales rose 2.7% in August
was warmly welcomed by the markets, because consumer spending is
central to the US economy, accounting for more than two-thirds of
US economic activity.
While the big rise was helped by the US "cash for clunkers" car
scrappage scheme, which has now ended, retail sales excluding cars
also increased by 1.1%, beating market expectations of a 0.4%
gain.
However, despite the share rises, Mr Benanke warned that the US
economy still faced some hurdles before it could exit
recession.
"It's still going to feel like a very weak economy for some
time," he said.
This cautious note was mirrored by a number of analysts.
"Investors are always following the herd," said Gregg Fisher,
chief investment officer at financial advisory firm Gerstein
Fisher.
"I think investors should sort of catch themselves now and not
get over-confident."