World Stock Markets may hate to see the Year End

Hardship leads to opportunity

March, 2009 marked a low point in the global economy including world stocks. The gains have been great on the stock exchanges since that point despite continued economic struggles across the globe. The Associated Press reports that a lot of markets had gains of 50 percent or better from March to the end of the year. The FTSE 100 Index of leading British stocks gained 15.02 points or 0.3 percent on December 31st, the last day of trading. That mark means the FTSE 100 Index gained 22 percent for the year. The French CAC - 40 showed similar gains, with a 23 percent gain to close the year. Germany's DAX fared even better with a 24 percent annual gain even though it lost a point on the final day of trading. The bull market gains were fueled by depressed stock prices because of the global r! ecession. Lower prices got investors to look for bargains, and as the recession slowed those stocks yielded high returns.

Asian markets set the pace for the year

The U.S Dow Jones industrial average is expected to post an approximate 20 percent gain for the year. U.S. gains along with Europe’s impressive gains would be a heck of a year, if circumstances weren’t bad. Those gains were outpaced with ease by Asian markets. China's Shanghai index and Hong Kong's Hang Seng rose 80 percent and 50 percent respectively. Analysts predict continued strong growth in both of these markets for the coming year and beyond.

A sobering historical perspective

2009 yielded tremendous growth from where it started to where it finished. Investors can stay happy if they have only a short term view. A sobering perspective can be arrived at by making a much broader analysis. Even though the U.S. and Europe gained considerably for this year, they are down in the stock market even more from a decade ago. Europe is down 22 percent from a decade ago even when factoring in the 22 percent gain for this past year. The CAC - 40, of France, had a similar story of being down 35 percent from 10 years ago. Germany fared slightly better with the DAX down only 14 percent from 10 years ago.

Where to go from here

Investors and analysts are trying to get a clearer picture of what will happen with the New Year. They struggle with whether stock rallies will continue, or if they’ve topped out again and will level off. Many are pointing to the currency exchange rates as a possible arena for better than average gains for 2010. Currency exchange rates stayed relatively steady over the course of the year. One indicator has been the rise of the U.S. dollar at year's end. The dollar was up .3 percent in London to end the year. The optimism stems from investors believing that the U.S. Federal reserve will begin to raise interest rates to head off inflationary tendencies as the U.S. economy continues to show signs of recovery. U.S. rates were at record lows in 2009 with nowhere to go but up in 2010 making the dollar an attractive investment for the coming year.