While there have been suggestions from some quarters that the recession may be coming to an end and the stock markets have become relatively stable, it appears many are still unwilling to take serious risks when it comes to investment.
The FTSE 100 Index, for example, has failed to make any sustained gains over the last few weeks, as nervy investors continue to play it safe. Short-term profit-taking has become a key trend, with people seeking to cash in on stocks and shares gains as soon as they occur because they believe they may go back down again quickly.
This safety-first approach is also being seen in the markets in which people are looking to invest, with sectors that are traditionally stable proving popular.
"We have defensives leading the way with pharmaceuticals higher by one per cent and this gives a strong indication of investors' appetite for risk, having witnessed the FTSE fall over six per cent in the last two weeks," commented Joshua Raymond, market strategist at City Index, on Tuesday morning. "Whilst there are certainly hopes for a short-term bounce, the long-term direction of the markets remains clouded."
He suggested that the recent falls were caused by a lack of major positive news, claiming that the only place the markets are probably going to go when there are so few economic indicators to go off is downwards.
One indicator that has been published this week is the British Bankers' Association's mortgage approvals data, which revealed that approvals had reached their best levels for more than a year. Commenting on the figures, Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors, said that while property transactions may rise by a little over the next few months, there are still a number of major issues holding the market back. Among these is the difficulty
first-time buyers have in managing to acquire mortgage finance and the "diminishing stock of instructions on estate agents' books".
Other news affecting the markets was a speech given by Spencer Dale, a member of the Bank of England's Monetary Policy Committee. According to Bloomberg, the value of the pound fell against other currencies as he suggested the economy could benefit from sterling being weaker.
