Improved trade outlook together with the recent positive preliminary announcements of financial statements from the companies have given rise to forecasts that profitability of the companies is continuing upwards. Several signs of increased M&A activities may also give share prices a boost.
Optimism in the "global growth engine" (USA) seems to be spreading at great speed to the rest of the world. In Euroland the upswing is only just beginning, however, hope and optimism are soaring. However, while being pleased about the prospects of continuously rising share prices, the investor should not forget the risks that still exist in the form of economic imbalances and the risk that the upswing in the USA will be "jobless".
Job creation is vital to any long-term upswing. In the long term, failure to create jobs may mean that the upswing, growth in the companies' earnings and thus also movements in market prices may come to a halt. At present, the investors seem willing to scale down this risk, which together with the optimism create a basis for further share price rises in the coming months.
To read the article "Optimism prevails and pushes share prices towards new highs this year - but danger lurks ahead" in Focus No. 64 click here
