Stocks and shares trading up and 'maximum weakness' has passed

09 April 2009 / by Rachael Stiles
Trading of stocks and shares on the London Stock Exchange totalled £156.9billion in March, up on the previous three months' trading figures.

According to the London Stock Exchange, March's trading figures were the highest recorded since October 2008, and 32 per cent higher than February's total trading value of stocks and shares.

While the value of March trading was still down 38 per cent on the same time last year, and the total number of trades, at 23.4million, was down 11 per cent on March 2008, the sharp increase last month suggests that the markets could be stabilising.

The FTSE 100 has fallen 34 per cent year-on-year, but recent events have helped to bolster confidence in the markets, such as the G20 summit last week, where world leaders agreed on a $1.1trillion injection of cash into the global economy, and this week's successful HSBC rights issue, both of which served to improve sentiment and share prices, if only temporarily.

Also showing green shoots in the stock market during March were exchange traded funds (ETFs) and exchange traded commodities (ETCs), with the number of trades (251,891) and value (£7.7billion) both setting new records.

The daily average number of trades in ETFs was up 42 per cent compared to the same time in 2008, and average value of daily trades rose 26 per cent.

Derivatives also saw a rise, with the total number of contracts traded during March reaching 10million, up 39 per cent year-on-year, with 455,750 average number of daily trades marking their second highest ever level.

Bob Doll, vice-chairman of global equities at investment management firm Black Rock, believes that while recent improvement in the markets does not necessarily mean that the economy has "bottomed", it does indicate that "we have moved past the period of maximum weakness."

He also believes that the improvement in economic data which has been occurring in recent weeks has much to do with the US Federal Reserve increasing quantitative easing and the governments' plans to insure the toxic assets on banks' balance sheets.

In America, he said: "We now appear to be in a period of improving market performance based on some less ominous economic news and indications that negative investor sentiment has peaked and is starting to reverse."

"On balance, we do believe that the recession has peaked and that the economy will stabilize in the second half of this year."

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