Closing Market Comments 8th December 2008

Going into the last few minutes of trading, it has been a day of solid gains in London leaving the FTSE 100 flirting with the 4300 mark.

Today was always going to get off to a good start following the very strong recovery seen by US stocks on Friday, after European markets had closed. A strong opening on Wall Street has also kept the positive sentiment bubbling along, leading to a broad rally across all sectors with financials and miners the stand-out winners. Markets seem to have not taken too long to decide that incoming President Obama’s planned public sector spending package – the biggest for around 50 years – will go some way to capping further serious deterioration in the US. 

It remains to be seen whether the recent strength ends up being more than a short term wonder.  This year investors have got too used to seeing the light at the end of the tunnel being a train, but to keep some sense of perspective, today’s gains have only served to push the London market back to where it started the month. But, US stocks did manage to stage a convincing recovery from last week’s awful unemployment numbers, so the real test of this rally will be if it can stand up to further downbeat news about the state of the economy today, and continue to focus on the possibility of a longer term turnaround.

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Tags: FTSE 100,  US PSBR