FTSE Hits 6 000 On US Budget Deal

FTSE Hits 6,000 On US Budget Deal.

Finally, the US House of Representatives has agreed at the last minute the US Budget for 2013, avoiding the so-called “fiscal cliff”.  The Budget allows for tax increases on the wealthy, enabling additional monies to be released to stimulate the economy.  

This move was strongly rejected by the in-opposition Republicans (Conservatives to us) and the Democrats (Labour) who are in power under Obama, have of course been trying to protect the less well-off but keep the World’s largest economy moving.  

As a result, FTSE 100 index today smashed through the 6,000 barrier for the first time since 2011.

Our View:
We do not see this FTSE rally as sustainable.  Traders and speculators will drive markets higher to make profit and then given that the UK’s economy is weak and many commentators are predicting a triple-dip recession, we see FTSE coming straight back down to around the 5,700 mark in the next few months.

If you are aggressive you may wish to invest in UK stocks for the time being, but be prepared to exit at short notice as the market will fall again.