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Global markets: Job market jitters

Oct 9, 2004

While the US markets were already reeling under high crude prices, weaker than expected employment report came as another setback and this resulted into the benchmark indices ending lower by 1% each during the week. With oil prices not making much movement on Monday, the stock markets got off to a positive start and strength in a couple of tech heavyweights further added to the momentum. Just when it was being felt that the tech rally would extend itself on Tuesday, the news that crude prices have reached a record highs knocked the wind out of it and consequently Nasdaq managed only marginal gains. Dow however, ended amidst decline. While the crude prices continued with its upward journey on Wednesday, investors took it in their stride and bought into stocks in anticipation of strong payrolls report, scheduled for release towards the end of the week. This resulted into both the indices gaining around 1% on Wednesday. However, that turned out to be the last gain making day as slew of negative news including another surge in oil prices and lesser than expected growth in employment figures left the markets jittery and resulted into sharp sell off during the last two days of the week.

Indices 1-Oct-04 8-Oct-04 Change
NASDAQ 1,942 1,920 -1.1%
Hang Seng 13,120 13,241 0.9%
Nikkei 10,985 11,349 3.3%
BSE* 5,676 5,777 1.8%
FTSE 4,660 4,699 0.8%
Dow 10,192 10,055 -1.3%
Dax 3,995 4,016 0.5%
* Based on Friday closing

Markets across the world witnessed mixed fortunes with Indian benchmark BSE being the highest gainer and Dow being the biggest loser over the week. Among Asian indices, apart from BSE, Japanese benchmark Nikkei also edged higher and closed with 1% gains. Although the index snapped a five-day winning streak on Thursday, the decline was not enough to reverse the gains accrued earlier in the week. European indices, FTSE and Dax also edged higher by 1%. However, tough times lie ahead for these indices as while US economy, the chief exporting destination of many European countries, continues to suffer from weak jobs growth, oil prices are also threatening to take the bite out of corporate profits.

(Price in US$) 1-Oct-04 8-Oct-04 Change
Dr.Reddy's 16.8 16.9 0.6%
HDFC Bank 33.6 33.2 -1.2%
ICICI Bank 14.3 14.0 -2.1%
Infosys 58.4 55.8 -4.5%
MTNL 7.2 7.3 1.4%
Rediff 7.8 7.5 -3.8%
Satyam 23.8 24.2 1.7%
Sify 5.7 5.6 -1.8%
Tata Motors 9.3 9.4 1.1%
VSNL 7.6 7.5 -1.3%
Wipro 19.3 20.8 7.8%

Indian ADRs also had mixed outing on the US bourses with tech major Wipro emerging as the biggest gainer while its counterpart Infosys suffering the maximum damage. Also ending amidst gains were fixed line major MTNL and the recently listed auto major Tata Motors. With the latter trying to acquire global presence through both organic as well as organic growth (its acquisition Korean major Daewoo’s CV division) it made good sense for the company to get itself listed on the NYSE. This will help it to tap foreign capital in a much more efficient way to further its growth plans. Also ending amidst gains during the week was pharma major Dr Reddy’s.

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