On October 15, 2008 bank shares knew a good day. Investors were convinced that banks could rely on a government guarantee and could still pay out dividend. But the fear of recession is as high as ever after two days of euphoria on the stock markets.
Many important banks have seen their shares charge up during the last two days. For example Lloyds TBS has gone up from 15.3p to 166.6p.
But the euphoria was only for a short period. Most traders said that investors were mostly looking to ensure their gains made on Monday or make sure that their losses weren’t as big as after last misadventure. The biggest losses were made with shares of mining and insurances.
We can see that improvement of the financial situation is on the way but analysts advise not to hurry into buying shares because we haven’t seen the end of the difficulties yet. After a lot of capital being pumped into the financial sector we should begin to see some improvement but the uncertainty of the investors remains as high as ever.
I think we haven’t seen the end of the crisis yet. The capital support of the governments is really helping the banks to strengthen their capital position, but it isn’t taking away the uncertainty of the investors. The financial crisis has really had a very bad influence on the global economy. The global economy will need some time to recover itself and until then recession isn’t inevitable. It is a bad moment to buy shares but without the investors capital, we get stuck in a vicious circle. The markets need the money of the investors, but the investors are scared for their investment because the markets are very volatile at the moment.
Source: Daily Mail: Bank stocks rise but fear of recession hits Footsie
http://www.dailymail.co.uk/money/article-1077790/Bank-stocks-rise-fear-recession-hits-Footsie.html
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As Jens told, I also don't think that the crisis is completely over yet. The trust of the shareholders is very small, despite of the measures of the government. And I understand why they hesitate to buy shares, the market is very volatile. But the companies really need new capital. If the situation goes on like this, I think that a recession is unevitable.
I think one of the main problems of the financial crises is the fact shareholders sell their shares immediately when they have made a small profit.
A lot of people buy shares at very low prices but when they have a small profit they sell because they are afraid to lose that profit. So stock couldn’t repair their loses. And so they stay at a very low price.
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