Indian Weekly Market Update July 3 2009
US investors reacted to worsening macroeconomic indicators by resorting to heavy selling for the third consecutive week following the release of dismal unemployment numbers. Non-farm payrolls contracted by 467,000 jobs in June 2009, much worse than the anticipated 363,000 job cuts, adding to the bearish sentiment. The unemployment rate increased to a 26-year high of 9.5 percent in June 2009 from 9.4 percent a month earlier. The weak jobs report raised doubts of any emerging signs of a recovery in the second half of the current year. Furthermore, the consumer confidence index declined to 49.3 in June 2009 from 54.8; this also dampened investors’ hope of a recovery. In addition, negative news emerged from the eurozone, where the unemployment rate reached a 10-year high of 9.5 percent in May 2009 from 9.3 percent in April. Widespread pessimism among investors pushed the Dow Jones Industrial Average (DJIA) and FTSE 100 down by 1.87 percent and 0.11 percent, respectively, for the week ended July 3, 2009.
Asian economies witnessed a mixed trend during the week with four of the seven major indices closing in positive territory. Shanghai Composite Index, China’s benchmark index (up 5.47 percent), was the top gainer due to a rise in manufacturing activity. The BSE Sensex climbed 1.01 percent ahead of the budget on July 6, 2009. The market lacked direction which led to increased volatility during the week.
The rupee appreciated 0.47 percent during the week due to higher demand from foreign institutional investors (FII) as they turned net buyers in equity markets. Crude oil prices fell 3.8 percent to US$66.52 per barrel after decreasing 0.6 percent the previous week. Skepticism about the global economic recovery due to a rise in the US unemployment rate suppressed crude prices.
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