Shares rally could prove short-lived

Central bank bailouts have recently revived ailing stockmarkets as investors have regained their risk appetites. But history shows that bear market rallies are generally followed by further steep falls…

Equity markets have enjoyed a strong revival over the six week period following perceived capitulation on 17th March. A recovery was always likely as the Federal Reserve and Bank of England paved the way for the partial relief of banks' over-stretched balance sheets.

Whilst investors are likely to be both pleased and relieved at the extent to which risk appetite appears to have recovered, the continuing difficulties being experienced by the Western banking sector, inter-twined with an economic slow-down that is now well underway, do not enable us to feel entirely confident that we're out of the woods yet.

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