Stock Markets In Bullish Mood

The Dow Jones Industrial index has broken the 15000 point barrier and has reached fresh record highs. Before the Global Financial Crisis struck, the Dow’s record close stood at 14164.5 in October 2007. Whilst yesterday’s close at 15056.2 is a new record and represents good news, it means that the index has climbed by just 892 points over the past 67 months. Since 1975, the index has seen annual gains which are typically double digit whereas most (but not all!) of the annual falls have been in the single percentage range. The best gain that the index saw in this period was 38.3% (1975) and the most disastrous fall was 33.8% (2008). It has grown for 28 years during this period and seen contractions in just 10 years – the longest consecutive losing streak was 3 years (2000- 2002). The market rebounded from the 2008 fall in 2009, not so much because the economic good times had returned, but rather because the fall was so extreme that bargains were to be had.

The same picture can be painted for other exchanges in general, but events such as the European sovereign debt crisis and the March 2011 Japanese tsunami will produce local variations. The Nikkei has been enjoying a Bull run since the end of last year when investors became convinced that Mr Abe would be the next PM. It has gone through the 14000 point barrier, hitting a high not seen for five years.

Surprisingly positive German factory data has helped to push the Xetra Dax index to fresh records above the 8000 point mark(8182), despite record unemployment in the Eurozone and widespread unease about continuing austerity measures in a number of countries.

The global recovery continues to be patchy and weak, but when you integrate economic performance over the longer time, it can be clearly seen. Political measures are needed to convert the “green shoots” into more jobs and greater general prosperity.