Global Market News;

Discussion in 'Economics' started by bapunagar, Oct 3, 2006.

  1. After a long time it is this year’s fourth quarter where the stock value of worldwide market fell, previously it was in the year 2000 where the Global market faced a similar situation. Interest-rate increases by central banks and signs of slower economic growth have put the aspect in danger.
    Many investors have prepared for the worst by favoring the industries least affected by a slumping economy, including food and beverages, health care, telecommunications and utilities. The groups were the best performers last quarter as markets rebounded from losses in May and June and the Dow Jones Industrial Average approached an all-time high. Analysts estimate that Standard & Poor's 500 companies will report profit growth of more than 10 percent in each of the third and fourth quarters, according to Thomson Financial.
    The Morgan Stanley Capital International World Index, consisting of stocks in 23 developed markets, rose by 4.1% during the third quarter. Higher borrowing costs combined with surging commodity prices played a major role in bringing down the price of the stocks earlier this year. Between May 9 and June 13, the MSCI World dropped 12% and the MSCI Emerging Markets tumbled 25%. The MSCI Emerging Markets Index, whose members come from 25 markets, also advanced 4.1% for its seventh gain in the last eight quarters. Both indexes have gained in every fourth quarter since the year 2000.
    Since then, the rally in commodities has given way to a retreat. Crude oil fell 20% in New York from a record of $78.40 a barrel, set on July 14. Natural gas tumbled 31% during August and September.

    U.S. Federal Reserve policy makers, anticipating that inflation would decline at their last two meetings after 17 straight increases helped in pushing the Dow average to 0.3% of its record, 11,722.98 on Jan. 14, 2000, in last week's trading .That hasn't stopped central banks outside the U.S. from raising rates. The effects of rate increases are being felt in the U.S where a five-year housing boom ended, and in Japan, where the economy is showing signs of uncertain U.S. prices of existing houses dropped and sales fell to the lowest level since early 2004. The declines suggested consumers may do less of the home-equity borrowing that has fueled spending.

    Telecommunications stocks were the second-best performers in developed markets. Their MSCI World index rose by 7.70 percent. AT&T Inc., the largest U.S. telephone company, added 17 percent.