Will the FTSE continue its rally in 2010?
As the UK stock market finishes the year on a high, more and more research analysts are looking towards 2010 with concern. There is a feeling in some places that many investors are ignoring the fact that the UK economy is not yet out of recession and is not certain to leave the recession in the final quarter of 2009. While it is highly likely the UK will leave recession in 2009 this is by no means a "done deal".
When you also consider that lending in the banking arena is not yet back to pre-credit crunch levels, therefore businesses are being starved of liquidity, there are still concerns that a great number of companies will go under in the first part of 2010. While investors seem particularly happy at the moment, as we saw with the Dubai debt crisis, there are still potential problems out there which have yet to arise. However, to say that investor confidence is fragile is something of an understatement as we have seen a number of short-term selloffs along the path of 2009.
Those who have an interest in the UK stock market will need to pay very close attention to economic indicators in the latter part of 2009 and the early part of 2010. Nothing is certain at this point in time even though potentially the UK economy is set for a recovery in 2010.
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