Stock markets 'to soar on Saddam seizure'
Euphoria following the capture of Saddam Hussein is set to grip world markets tomorrow, driving London shares towards a 15-month high.
Traders are tipping the FTSE 100 Index to open 60 points ahead at 4407 with an even bigger rise in prospect on Wall Street as positive sentiment takes hold.
That would put both the Footsie and the Dow Jones Industrial Average on course for new highs in 2003.
London shares are set to move towards the 4410 mark it set at the beginning of the month but hopes are high of breaking past the 4449 high set on August 27 last year.
Across the Atlantic, the Dow is predicted to open 100 points up at 10,140 as it closes in on the 10,216 high it set in May last year.
Tom Hougaard, of financial bookmakers City Index, said the capture of the former Iraqi dictator would help lift some of the uncertainty that has been affecting world stocks since the September 11 terror attacks.
He said: “The thinking here is that there will not be a seller in sight tomorrow morning.”
Attention will focus on whether the capture of Saddam acts as a catalyst to drive stocks higher or whether the lacklustre performance of world markets in recent weeks persists.
The opening of Japan’s Nikkei index and the Hang Seng in Hong Kong will provide early indications of whether share prices are likely to enjoy a sustained rise.
Jeff Langham, a trader with CMC Group and part of the deal4free financial bookmakers network, predicted gains for both the FTSE and Dow in early trading tomorrow – but these would not be translated into a long-term trend.
Oil prices were set to fall with Saddam’s capture interpreted as a sign of increased stability in the Middle East while the US dollar, which slumped to 1.748 against the pound on Friday, was expected to strengthen.
Mr Langham said: “Tomorrow is going to be a good update for the markets but by Wednesday they may well have run out of steam.
“The threat in Iraq hasn’t been at the forefront of people’s minds in recent months, the weapons of mass destruction still haven’t been found and the capture of Saddam Hussein isn’t going to halt acts of terrorism.”
The London stock market has been slowing down in the past two weeks with investor confidence weakening in a number of blue-chip stocks.
Retailers, in particular, have seen their shares come under pressure amid concerns about consumer debt, fears of higher interest rates and expectations of poor sales.
Traders were also keen to book profits before the end of the year for tax purposes, enabling them to start 2004 with a clean book, Mr Langham said.
