FTSE starts brightly in 2012
Britain's financial markets have started 2012 in a positive fashion, with share prices looking strong.
- (1888PressRelease) January 06, 2012 - The FTSE 100 closed January 3rd 27.63 points higher at 5,699.91 and the FTSE 250 259.05 points better at 10,361.95.
Investors reacted to encouraging economic data from Europe, particularly the German unemployment level, which fell significantly more than expected to reach a low not seen since reunification.
There was also an expectation than Chinese manufacturing data would be sluggish, but again, the reality was better than expected and the markets responded.
However, looking ahead to the next 12 months, many financial experts do not expect this promising start to be sustained.
Mel Kenny, Independent Financial Adviser (IFA) at Radcliffe & Newlands, told This is Money that while there is a "share boom" on the horizon, dividends will remain king as overall yearly growth is expected to be low, with the FTSE closing around the 5,000 mark.
Norwest Consultants IFA Harry Katz has a similar outlook, telling the publication he would be "relieved" if the FTSE finishes above 5,000, citing political instability in North Korea and Iran, the financial saga in the eurozone and Britain's own austerity drive.
"I believe we are in the middle of a long period of low growth and high volatility. This may last for many years to come until we shake off all the debt," added Gary Lucas, Director at Burlington Associates Limited.
A more optimistic tone is set by Robin Keyte, IFA at Keyte Chartered Financial Planners, who thinks the FTSE will end 2012 nearer the 6,000 mark.
He explained: "The co-ordinated action of central banks on November 30th 2011 and subsequent steps aimed at supporting banks will I hope mean that we are less likely to face a catastrophic financial event in 2012.
"However share markets will remain volatile and with the capacity for the FTSE 100 to move 200 points in a day it is entirely possible that it will exceed 6,000 during the year."
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