Market rally predicted to continue - Investments - News - Moneyfacts


Market rally predicted to continue

Market rally predicted to continue

Category: Investments

Updated: 11/09/2009
First Published: 11/09/2009

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Investors have been told they can be optimistic that the recent market rally will continue for the foreseeable future.

The FTSE 100 last week reached the 5,000 mark for the first time in almost year, having risen more than 40% since hitting a low in early March.

According to Santander Asset Management, it is the unprecedented efforts of central banks around the world that has helped to stimulate economic growth.

Looking ahead, the firm said it had identified two reasons why the upturn could be sustained in the short term.

"The first is that there is no sign of inflationary pressure picking up meaning that central banks can continue to inject liquidity into markets," said Richard Moore, manager of the Santander UK growth fund.

"The second is the implication of the Kraft bid for Cadbury that took the markets completely by surprise. Blue chip FTSE 100 stocks do not normally rise 40% in a single morning on news-flow that has been even vaguely discounted. Investors were clearly shocked and the bid represents £10 billion worth of corporate confidence in the future."

Despite his high hopes, Moore concedes that ultimately everything will depend upon the actions of the consumer.

"Central banks have provided the liquidity but it is up to the consumer to spend rather than save and there is little sign of this happening yet."

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