Recession over? Global stocks at new 11-month high

World equities rose on Wednesday to new 11-month highs, after upbeat US data boosted faith in an economic recovery, persuading more investors to sell their low-yield dollars to buy growth-oriented stocks and commodities.

This week’s data showing a jump in US retail sales has been interpreted as another sign the world’s biggest economy is indeed on the road to recovery – signals confirmed by Federal Reserve Chairman Ben Bernanke who said on Tuesday the worst US recession since the 1930s was probably over.

The optimism saw fresh cash flood to stock markets worldwide and bolstered oil to above $71 a barrel and gold to 18-month highs. The dollar however fell to a one-year low against a currency basket as investors shifted to riskier assets. World stocks rose 0.8 per cent to the highest levels since early October 2008, while emerging stocks surged 1.5 per cent to a new one-year high, trading at levels last touched before the collapse of Lehman Brothers.

“When you have comments coming out from Bernanke about a technical recession ending, that’s increasing the pressure on the bears, there’s a bit of a bear squeeze going on,” said Mark Robinson, head of equity research at Unicredit in London.

“There is also a stronger fundamental element – the G10 is pulling out of the slump and Asia is clearly in a V-shape (recovery). That’s driving risk trade and commodities — in the last week and a half, and particularly in the last 24 hours, we have seen a commodity stocks trade,” Robinson added. READ MORE …