Jul 10, 2004|
Global markets: Dow(n) one, Dow(n) all
Steady stream of earnings news trickled in but were fairly short on expectations especially the tech majors. As a result, while the tech laden Nasdaq ended lower by 3% , Dow shed a little less than 1% for the week ended July 9, 2004.
On account of Independence day holiday, the week got shortened on the US bourses and the trading activity began only on Tuesday. However, it did not take the markets long to go into the red. Oil price rise due to supply disruptions and a chip sector downgrade by Lehman Brothers spooked investors and both the benchmark indices closed at their lowest levels in over a month. While both Dow and Nasdaq started off on a strong footing the next day, spate of earnings warnings and tech sector downgrade erased most of those gains thus resulting into a marginally positive ending only. Tech stocks continued to weigh on the markets on Thursday as well and a rather lackluster earnings report from Internet heavyweight Yahoo, led the markets to edge further lower. Fortunately, the week did not end as it started. Dow heavyweight, GE, announced better than anticipated second quarter numbers and this gave investors some reasons to cheer. With more earnings reports due next week, it is being expected that markets would remain weak as investors book profits after earnings expectations have been met.
Barring Indian benchmark, BSE, stock markets all across the world witnessed weakness and ended lower for the week. After a slew of US earnings warnings, investors across Europe and Asian countries such as Japan have turned jittery as their growth prospects are substantially linked to that of the world’s largest economy. With the US markets expected to remain bearish, the scenario on these indices is not going to be particularly good either. The Indian benchmark however, is relatively insulated and therefore acts more in accordance to the local moods and swings rather than behaviour of US markets. The stand out gains could therefore be attributed to the growth story remaining more or less intact.
Barring a few exceptions, Indian ADRs ended mostly in the red during the week. Three ADRs from as many sectors ended with gains, thus pointing to the fact that there was no particular inclination towards a sector. With gains of 3%, fixed line major MTNL emerged as the highest gainer. The buoyancy could be attributed to general sense of optimism among sector stocks on the back of FDI limit in the sector being hiked to 74% from 49%. Pharma major Dr Reddy and tech bellwether Wipro with gains of 1% and 2% respectively rounded off the list of gainers on the US bourses during the week. Witnessing a decline of 7%, tech major Infosys led the pack of losers. While this could be attributed to no fundamental news, significant appreciation in the recent past and overall despondency among the tech stocks on US bourses must have led to the decline.
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