At last, some investor relief. This morning’s market surge has seen beaten-down banks rebound.
A case of the medicine starting to take effect or a "dead cat bounce" with further turmoil to come?
Who knows? City types were pointing to short-term profiteering, warning that the gains were likely to be short-lived.
At times like these, though, it’s worth getting a sense of perspective.
Deals are still being done, offices are still being let, houses are still being bought and sold, cars are still being driven out of showrooms
– just not on the same scale that we were used to pre-meltdown.
We also heard reassuring noises this morning from a number of listed heavyweights.
WH Smith banked better-than-expected annual profits and unveiled plans to open more standalone book stores.
Scottish pumps specialist Weir upped its profit forecast and oil services giant Wood Group assured investors it was growing strongl
y having added 3,000 jobs in the past year.
Clearly, it ain’t all doom and gloom out there.
What has been driving markets lower for months now is fear
– a factor that some say may account for half of the fall in the value of banking stocks.
Uncertainty and strong markets have always made uncomfortable bedfellows. It’s just that there’s been a lot more fear than normal of late.
Fear over the health of the housing market, inflation, the jobs market, the future of the banking sector, the state of the high street, etc, etc.
Worrying times indeed.
The hope must be that this week’s co-ordinated moves to cut interest rates and action to bail out the banks will remove some of that fear factor.
Further pain to come? More than likely. US Treasury secretary Henry Paulson has warned that more banks will fail despite the $700 billion rescue package to shore up the financial system across the pond.
Closer to home, there’s certain to be further shakeout in Britain’s financial sector.
The most reassuring thing that can be said at this juncture is that this is not the end of the world
– even though it may feel like it.
Perhaps we are beginning to see the early stages of hope conquering fear.
