Both the United States and the United Kingdom’s stock markets have had their share of ups and downs in the last few years, partly due to a shaky global world economy and the real estate bubble burst. While it’s impossible to predict exactly how the tide will flow, both markets appeared to show signs of recovery over the last year.
The US stock market has had a solid year of rising numbers. The Dow recently topped 16,000, with Standard & Poor’s 500 nearing 1800. A bigger milestone is the NASDAQ composite, which is approaching 4000. The last time the composite performed so well was before the bust of dot com start-ups back in 2000.
Investors are optimistic, believing the upturn to be a legitimate result of favorable circumstances and not just another market bubble due to burst at any moment. The recent reports of a stronger labor market than initially suspected and the restrain on inflation pressure do affirm a more positive outlook. Janet Yellen, the potential replacement for current Federal Chairman Ben Bernanke, is expected to continue the bond buying program currently in place. The bond program is attractive to investors and providing stimulation by way of keeping the costs to borrow down.
The UK market is also experiencing an uptick, but for a few different reasons than the market in the United States — although both markets appear to be benefiting from an improvement in the global economy. Some market financial mainstays, such as Barclays and the Royal Bank of Scotland, which had a shaky start, are starting to rebound. The recent news of the UK’s shrinking debt has certainly rallied investors and those with savings in long-term UK products such as the stocks and shares ISA.
Both the industrial and precious metal markets appear to be in a slump, with numbers sliding across the board. Pharmaceutical companies have remained a sure bet for investors in the UK market, with AstraZeneca and GlaxoSmithKline edging upwards. Giant energy supplier, National Grid saw a slight increase after profit reporting. Car production levels are currently at their highest point so far this year, with a strong automobile market helping to bolster the overall economy.
The Federal Reserve’s recent indication that the US will start scaling back its current stimulation programs has had a negative impact on both the US and UK markets. The long term effect of the US reduction in stimulation programs is yet to be seen.
Photo Credit: Ken Teegardin