The UK stock market managed to achieve four positive days out of five last week, confirming my contrarian theory that with all expectations being negative, the market could go only one way and that was upwards.

Recent economic data has suggested evidence of a pick- up in conditions both here and in the US, allowing us to avoid the dreaded word recession. The conventional definition of a recession is two quarters of negative economic growth and that has certainly not been experienced.

However that is no comfort considering the level of profits that appear to have disappeared from the corporate sector in the past 18 months and the knock-on effect on share prices, investor confidence and general market and economic sentiment.

Negativity is never far away at present, and no sooner is there talk of economic recovery, than thoughts switch to the possibility of a "double dip". Economic recovery is never plain sailing and, statistically at least, a further setback in economic data is quite likely before consistent growth is re-established.

One interesting glimmer of good news last week was the strong recovery in the manufacturing Purchasing Managers Index compared to the January figure, with the figure reaching its highest level for twelve months. Pricing power for manufacturers remains weak though actual and new orders expectations have risen sharply.

John Pearson - Divisional Director

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