THE bulls are snorting again.

The bears are hiding in the woods. It should not have escaped your attention that the stock market has been soaring in value over the past month.

From a six-year low on March 3, the FTSE has rallied by more than 17 per cent. Even after this rise, the market still has a long way to go to catch up to last year’s levels, if it does, but it already remains poised to post an increase on levels seen at the start of this year.

History shows that bull market recoveries occur quickly and sharply.

The bear market that has been in operation for the past 17 months has been one of the longest in history, giving testimony to its strength and painful consequences. The market is now fairly immune to bad news, no matter how desperate the BBC is to give us some, as much of it is lagging information that has since changed. Present positive news coming out, but often dismissed in some quarters, provides a real sense of optimism.

The cause of the credit crisis was US housebuyers’ belief that house prices could only go up, and then borrowing more than they could afford.

This was, in hindsight, an accident waiting to happen.

The accident duly happened when mortgage rates went up and property prices fell.

The bad debts were then passed on to the banks, which needed to write-off these sums.

Similarly in the UK, property speculation at the top of the housing market bubble led to bad debts passed on to the banks.

These institutions cannot win popularity in any circumstances.

This is not a new phenomenon, as any knowledge of Shakespeare’s portrayal of money-lending characters shows.

Banks are criticised when they make profits – for making too much – and when they post losses, for not making a profit.

As previously mentioned, the magic ingredient to help an economic recovery was a stabilisation in property prices. That, we may now have. House sales are up in the US. The lagging Case- Shiller index of previous three month US house prices is only as up to date as November to January and would take until May to show an uptick, by which time the best results of any sustained rally would already have been seen.

Last week, the Nationwide confirmed that UK house prices rose by 0.9 per cent last month, the first increase since October 2007 – 17 months ago. Now that is a coincidence, or is it?

If house prices are no longer falling, then the property debts held by the banks are not as bad as the write-offs made.

The banks have carried out buybacks of their own bonds and are now holding relatively high levels of capital adequacy. This is why financial shares have let the market bounce back, closely followed by property and commodity stocks.

Retail stocks have bounced as well, following the excellent results from Marks and Spencer, despite most analysts predicting doom and gloom. Lower interest rates have made a dramatic difference to the spending power of shoppers.

In a House of Lords select committee last week, City Minister Lord Myners said that the Government’s minority stake in Lloyds Banking Group was likely to be significantly reduced. He said the increased appetite for bank shares will see private investors increase their majority control.

■ Anthony Platts is a divisional director in the Teesside office of Brewin Dolphin, and can be contacted on 0845-213-1340. All prices quoted in the article are from public sources. The views expressed are not necessarily held throughout the Brewin Dolphin Group. You should bear in mind that no investment is suitable for all circumstances and it is important to seek expert advice if in any doubt.

Brewin Dolphin Limited is a member of the London Stock Exchange, authorised and regulated by the Financial Services Authority.