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FTSE 100 bounces on Chinese stimulus package hopes

After a disastrous few days the FTSE 100 index rebounded 3.8% today as traders became aware of the potential for a new Chinese stimulus package which could, along with the US stimulus package, stop the sharp decline in the worldwide economy. Stock markets around the world rallied although there is some scepticism in the Far East as to whether the Chinese authorities are ready to announce a massive stimulus package, as rumoured.

The mining industry, which has come under particular pressure of late, was the main beneficiary with a number of mining stocks rising by as much as 20% from recent lows. There is a feeling that as and when the Far East economy starts to pick up we will see demand for mining materials which will then filter through into the mining stocks. This is the first real sign that the Chinese authorities are willing to pour billions upon billions of dollars into the economy and along with the massive US financial stimulus package making its way through Congress there is hope that the worldwide economy will start to level off.

The next few days are vital for the short to medium term direction of worldwide stock markets as we now need firm news to back up rumours and speculative buying which has appeared over the last 24 hours.

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