Theoretically, that should make equities highly attractive even after taking account of last week's heady 100 point climb in the FT-SE 100. Shares presently yield an average of about 4.5 per cent. With interest rates at 5 per cent, the gap would be at a historic low. In the US, the Fed's low interest rate policy has led to a flood of money into stocks and shares.
The same thing could be about to happen here. Cash is king would become replaced by a new mantra: cash is trash. But watch it. Business confidence is still plunging and the outlook for both earnings and dividends is poor. The London market will want real signs of economic revival before following Wall Street's example.Reuse content