• Investment World
• eWorld
• Catalyst
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest

K.S. Badri Narayanan

ONCE again it was the turn of emerging markets such as Brazil, India and Indonesia to post handsome returns even as the global majors - US, Japan, Germany, France and the UK— witnessed a sharp fall. A steep rise in oil prices, a slowdown in the US economic growth, the threat of terrorist attacks and insipid financial performance from corporate majors appeared to have affected sentiment in the developed markets.

Benchmarks such as Nasdaq, S&P-500 (US) and the UK's FTSE touched 52-week lows amid heavy selling.

US/Europe markets: Equities began the month on a weak note following tech sector warnings, higher oil prices, unexpected jump in US weekly jobless claims and bad news from General Motors.

Tech stocks were the worst affected on discouraging outlook from hardware and chip stocks, a downgrade for Internet bellwether Yahoo, and analysis that Intel's latest product launch is not doing as well as expected. Further, Noika's warning on sales also spoilt the mood. Further, search engine wars among Google, Yahoo! and Microsoft kept the investors on tenterhooks. Even Microsoft's decision to pay a special dividend of $3 per share failed to revive the sentiment for tech stocks.

The Nasdaq lost ground due to weakness in the technology sector. Merrill Lynch downgraded the global chip sector to "underweight" from "overweight" including the giant chipmaker Intel.

Reports of an expansion in the manufacturing sector in June at a slower pace than in the previous months, a rise in filings for unemployment insurance and a 0.3 per cent rise in the construction market, which was lesser than that in May, kept the markets under leash.

Besides, the June payrolls report showing slowing growth and the threat of more terrorist attacks kept the volume at an anaemic level.

Even reports such as consumers spending more during May (the increase was the largest since October 2001, when spending rebounded with gusto after the September 11 terror attacks) and General Electric Co's strong numbers failed to cheer the global majors, as the market tumbled to a two-month low.

Mr Alan Greenspan's testimony to the Senate Banking committee that the economy is in solid shape and that inflation does not pose a threat to future economic growth failed to turn the market sentiment.

Asia: Japanese equities opened on a positive note on the news that business confidence, according to Bank of Japan's Tankan survey, had risen to its highest level since early 1990s. But worries over semiconductor demand and the negative signals from the US immediately grounded the optimism in Japan markets and pushed the Nikkei to a seven-week low during July.

In Seoul, stocks tumbled after a weak forecast for the domestic economy and earnings fears sparked a sell off in blue chips.

Better than expected economic data - Singapore's economy expanded at an annualised 9.1 per cent in the second quarter of the year - lifted the Straits Times Index.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
FMCG stocks: No longer for defensive investors

Copyright © 2004, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line