Watching Wall Street

Article Abstract:

US share prices could fall if US interest rates are raised, and this could affect share prices in the UK. Both markets have tended to move together, especially since the early 1980s. UK prices have not risen by as much as prices in the US, but this may not prevent a fall for UK shares. UK pension funds are able to support the UK market but cash holdings of pension funds do not always correlate with a strong performance for UK shares. The most likely outcome of a drop in US prices is that UK prices will also fall.

United Kingdom

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Wall Street: wealth dangers

Article Abstract:

The chairman of the Federal Reserve, Alan Greenspan, is concerned that rises in share prices could give rise to inflationary pressures. Rising share prices have boosted households' wealth, yet the savings ration has increased. Shareholders may be concerned about saving for pensions rather than seeking to spend their wealth. Consumer borrowing has increased, and high levels of personal debt are likely to constrain spending. The stock market does not appear to be creating inflationary pressures.

Inflation (Finance), Inflation (Economics)

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Wall Street: high hopes

Article Abstract:

Earnings growth for US companies in the S and P 500 index could rise by 17% in 1997 despite economic growth of no more than 7%, analysts forecast. The index is comprised of larger firms that have been moing production abroad and which tend to be well managed. Mergers may also boost efficiency. There could still be problems, either if slower growth dampens earnings, or if faster growth pushes up interest rates, depressing share prices despite strong profits.

Standard and Poor's 500-Stock Price Index (Index), 1997 AD

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