In Paris the CAC 40 index is thus hoisted above 3

The spectacular rebound directed by the stock markets since last March, which has pushed for several weeks on their more levels of the year, does not appear to have blunted the renewed appetite for risk. On the contrary, it is as if more and more investors took the train, lest they miss part of the increase. Yesterday, the indices of the main Western scholarship again said upward orientation, litters by new US statistics proving that economic activity has finished to deteriorate and that the first signs of course still tenuous and fragile recovery are now at work. In Paris, the CAC 40 index is thus hoisted above 3.800 points, for the first time since early October 2008, at the end of a session by 1.64 in unison of the awards in London and Frankfurt. The atmosphere was also optimism on Wall Street, although the gains were more moderate, with a Dow Jones up 1.12 at the close.

Accommodative policies

Clearly, markets are today worn by the flows generated by investors now reposition on the shares. Macroeconomic conditions improve, but resumed lack still so strong that no one believes that central banks recover soon involved their accommodative monetary policies. As the prospects of higher interest rates will remain remote, conducive to equity markets likely to remain environment. This is why more managers and analysts agree that the markets have not yet exhausted their potential to increase. It is the case of David Kalfon, CEO of EFG Asset Management France, which saw, not without a certain satisfaction, the CAC 40 index overflow last Friday the objective of audiences points he had assigned him on May 7.

The issue is not whether if equity markets will continue their progression, but they can still win a significant percentage by the end of the year, after already the most important stock market rebound observed during a year of recession. The analysis conducted by JP Morgan Asset Management specialists on twelve past banking crises shows that concerned equity markets have rebounded by an average of 78 in dollars in the year following the crisis. On this finding, indices, who returned to 55 since the March low, therefore have the right to enjoy 15 to 20 of additional earnings. "History suggests that it is possible, but far from certain", they moderate.

Historical contingencies

These same managers observe that an appetite for risk calculated by Credit Switzerland index very recently found a level "characteristic of euphoria". Gold, recall, when the markets reach this level of euphoria, they remain on average six weeks, but the highest gain found at the end of such period is up to 14. Similarly, the analysis of quarterly increases in the S & P 500 of the New York Stock Exchange index shows that only seventeen quarters resulted in excess of 15 since 1928 gains, is only 5 of all periods.

However, stock prices might, even to abstract from these historical contingencies, to move higher still if sceptics, have remained on the sidelines until there are few, continue to bring to market forced on equity markets significant liquidity available to them. It is a possibility that do not exclude the managers of JP Morgan Asset Management: they remain for the time being sur-pondérés shares, believing that it is too early to draw their reverence to this stage of the economic cycle.