Weekly Market Review
|
On Tuesday, Worldcom told shareholders it would restate its earnings for 2001 and the first quarter of 2002 after it fabricated profit by misreporting $3.9 billion in expenses. On Friday, Xerox said it inflated revenue by $1.9 billion during the past 5 years by misreporting sales. Nevertheless, the markets were up on the week for the first time since May 17. While the S&P added less than 0.1 percent, it did rebound from a drop of as much as 3.7 percent on Wednesday. Wall Street will be hoping for a more subdued tone this week as investors celebrate the July 4 Independence Day holiday on Thursday.
- European stocks rose as signs that the US and Europe’s economies might be reviving helped to lift benchmark indexes, some of which posted their worst first halves on record. The Dow Jones Stoxx 50 climbed 2.2 last week in a very volatile market. It fell 2.8 percent Monday, erased that loss Tuesday and shed 2.2 percent Wednesday. The ECB meets on Thursday but is expected to leave its benchmark rate unchanged.
- The UK market finished up over 1 percent, reversing out the previous week’s losses, as some end-of-quarter buying lifted the market. Retailers were strong, with some positive trading statements indicating continued consumer spending. Financials and oils were late sector winners on the week.
- The Irish market fell last week though it did manage to regain some of the lost ground on Friday after the Central Bank of Ireland raised its forecast for economic growth this year to 3.25 percent. The ISEQ fell 17 percent in the first half of the year, the biggest first half decline since 1994. The biggest gainers in the first half were McInerney, Arnotts and Anglo Irish Bank. The largest decliners were Elan, Iona Technology and Horizon Technology.
- The markets finished strongly last week, the first weekly gain in five, amid optimism that the Tankan confidence index due out Monday, will report a significant improvement in confidence. Furthermore, a government report of Friday showed factory production rose more than economists’ estimates, posting its biggest monthly gain since September 1992. However, even though Japan may have come out of the worst of its recession, its too early to ignore the potential impact a US slowdown may have, because of Japan’s dependency on export growth.
- Index Moves: Dow -0.11%; S&P 0.07%; NASDAQ 1.54%; Stoxx50 3.20%, CAC 2.59%; DAX 3.55%; FTSE 1.11%; ISEQ –2.16%; NIKKEI 2.58%; TOPIX 2.25%.
BOND MARKET
Bond markets rose last week as the volatile stock markets drove investors to the safety of government debt after the Worldcom announcement. The US benchmark 10-year note now yields 4.8 percent, just 9 basis point above a six month low. The value of the 10-year note has risen 4.9 percent this year. Bond trading may be slow this week because of the Independence Day holiday on Thursday.
- European bond markets also found support from the volatile equity market. Waning confidence in companies and their executives and concern that a rebound in earnings may slow have helped the European bond market to boost solid gains this year
|
