Published August 10, 2009

Past two weeks see markets at their highest this year

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(PARIS) Reassured by second-quarter results and a series of encouraging indicators, the world markets have rebounded significantly since the start of the summer, and climbed to their highest levels this year.

Last week, Wall Street's Standard & Poor's 500 broad-market index surged above 1,000 on Thursday and the Paris CAC 40 on Friday rallied 1.24 per cent to 3,521.14 points - both highs not seen since last November.

In Tokyo, shares on Thursday reached a 10-month high with the benchmark Nikkei 225 index rising 135.56 points to 10,388.09, the best finish since Oct 6.

The week before last, it was London and Frankfurt's turn with the FTSE 100 index of leading shares and the Dax reaching 4,600 and 5,300 points respectively.

Meanwhile, oil prices rose on Thursday to US$76 a barrel in London, the highest level this year.

The markets had returned to levels last seen in October and November after the collapse in September of the American bank Lehman Brothers, considered the epicentre of the financial crisis, according to analysts.

After the bank's failure, there were fears for the future of the entire capitalist system, they said.

But the stock-market rebound showed that the system 'is not going to collapse', said Francois Duhen of CM-CIC Securities.

Second-quarter results, including those of the American banks, prompted the rebound, with results from JPMorgan Chase to mid- July providing a kickstart.

'Businesses showed that they can restructure themselves and improve their margins quickly,' said Christian Parisot, shares strategist at brokers Aurel.

Economic indicators showed that in the United States, property prices had stopped falling and that industrial production had started to pick up, said Frederic Buzare, of Dexia Asset Management.

If the worst of the crisis appears to have passed, it is still difficult to talk of a recovery while so many uncertainties remain.

A recovery would require the type of growth not yet borne out by the statistics, said Mr Parisot.

'There are encouraging signs, but there is still the question of consumption' and just beneath the surface of employment, he said.

On Friday, monthly US employment statistics reassured the markets, with an unexpected drop in the number of people out of work.

'In terms of growth, one is clearly less worried for the third and fourth quarters' due to government bailout plans, said Mr Duhen while warning that the benefits would progressively disappear in 2010.

For Mr Buzare, the following year will be the 'year of all the dangers' with potential difficulties as a result of an increase in the cost of raw materials, a drop in the dollar, normalisation of public deficits and the Chinese stock exchange bubble. -- AFP