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Currency and Stock Markets Weekly Outlook

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A tough situation

Fri, Jul 4 2008, 13:43 GMT
by Adam Narczewski

X-Trade Brokers, XTB


Global equities markets are in a tough situation. Declining indices and session finishing in red are not the best advertisement for stocks recently. The mood of investors is not good and it seems that this situation can last for some time.

This past week was no different. Declines were not spectacular but steady. The American economy is far from recovering, and investors are starting to get worried. The Dow Jones Industrial Average declined by 1.25% to 11,287 while the S&P 500 dropped by 1.89% to 1,261. It has to be noted that markets were closed in the U.S on Friday due to the Independence Day holiday. European indices followed the American lead and continued to decline. The Polish WIG20 finished the week in red at -2.30% and is closing to the “magical” 2,500 barrier.

Macroeconomic news that were published this week did not help bulls to lift the markets. The labor market in the U.S is still in crisis confirmed by the increased unemployment rate to 5.5%. The Nonfarm payrolls report showed a -62K reading, almost the same as analysts expected. Important to investors were also the ISM reports. While the ISM-Manufacturing reading was above 50 points (at 50.2, better than forecasts), the more important ISM-Services publication was negative. The ISM-Services index dropped below 50 points to 48.2, which indicates that the economy is heading into recession.

It is a hard time to invest in equities right now. Speculators are excited since soon they can attain good bargains. We need to be patient since the occasion might not come so soon.


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