Global Markets Step On Slippery Ground

The result season always sees hits and misses but earnings took a downbeat this time hurt by pandemic-triggered lockdowns that shuttered some stores.

Global equity indices remained mixed in the last few weeks. In the US markets, S & P 500 was up by 0.43 per cent with a boost from the earnings' season. During the fortnight a divergence was seen between the Dow Jones Industrial Average (DJIA) index and NASDAQ index. DJIA was down by 0.58 per cent while NASDAQ gained by 0.34 per cent. It is said that a possible reason for such phenomena is that the divergences are a symptom of late-bullmarket speculation from retail investors. The typical retail investors are far more interested in the companies that dominate the Nasdaq Composite than the blue chips included in the DJIA. Hence, when there is rise in retail trading, Nasdaq’s volatility generally tends to rise more than the DJIA.

In Europe, benchmark indices such as FTSE 100, DAX and CAC 40 declined by 0.43 per cent, 1.51 per cent and 0.60 per cent, respectively. Weaker oil prices weighed on energy firms in the UK along with stocks of heavyweight cigarette makers seeing a dip after a report suggested the United States was considering a rule to cut nicotine in all cigarettes sold in the country to levels at which they are no longer addictive. The result season always sees hits and misses but earnings took a downbeat this time hurt by pandemic-triggered lockdowns that shuttered some stores.

DAX weakened as investors remained concerned after data showed the Euro zone entered into a second technical recession in the first quarter of the year. Shanghai Composite index, which is one of China’s prominent indices, ended lower on Sino-US tensions. Tech stocks remained under pressure as generally tech firms are seen to be most vulnerable to the rift between two of the world’s largest economies. Adding to the pressure on tech stocks was Beijing widening crackdown on fintech companies. Chinese financial watchdogs might order them to strengthen compliance with regulations. Tracking losses in heavyweights in Mainland China, Hong Kong stocks also tumbled.

Hang Seng fell by 1.29 per cent during the fortnight. The Straits Times Index (STI) that comprises of the stocks of 30 representative companies listed on the Singapore Exchange rose by 0.27 per cent in the last few weeks. Meanwhile, South Korea’s KOSPI slipped by 1.47 per cent. Nikkei underperformed its peers, spiralling down by 2.94 per cent on disappointing tech outlook and pandemic concerns. Other well-known indices in global markets such as S&P/TSX Composite Index which is the benchmark Canadian index fell by 0.50 per cent during the fortnight whereas Brazil’s BOVESPA index dipped by 1.69 per cent. The S&P/ASX 200 which is considered the benchmark for Australian equity performance ended the fortnight in the negative territory declining by 0.68 per cent.