Investment

THE MARKET REACTIONS TO THE PREVAILING CONDITIONS

Stocks sustained a great fall towards the end of an unpredictable week across markets. The results saw investors analyzing the market since the European Central Bank (ECB) held its meeting a week ago. The meeting lay policies for the global central bank to follow. The move initiated a selloff on long dated bonds that cut across currency and equity markets. Numerous players in the stock market now set their eyes on the Federal Open Market Committee (FOMC) and Bank of Japan meetings that are scheduled later this week.

The market experienced a varied wave of shocks; setting various stocks tumbling, among the changes: the Dow Jones Industrial Average went down 0.5 per cent or 88.68 points to 18123.80 by the end of last week. The Nasdaq Composite slipped 0.1 per cent, or 5.12 points, to 5244.57. The S&P 500 declined 0.4 per cent, or 8.10 points, to 2139.16.

However, the three indexes experienced gains, Nasdaq led with an increase of 2.3 per cent in its shares of biotech and technology companies together. This turned the tables around, setting the biggest rise since the week ended on July 1st. The S&P 500 went up 0.5 per cent while the Dow industrials surged 0.2 per cent for the week.

Up to the time leading to the end of last week, energy and financial companies pulled down U.S. stocks. Things did not augur well with the banking industry either. Bank shares declined after it was announced by the Justice Department of the U.S. to have Deutsche Bank pay $14 billion to clear up a set of mortgage securities that emanated from the financial crisis.

Financial companies in the S&P 500 slipped 0.9 per cent.

The German lender shares declined 8.5 percent in Frankfurt, as the clearing figure went past the expectations of investors and market analysts.

The Stoxx Europe 600 experienced a 0.7 per cent rise closed the week having slipped by 2.2% – the most enormous decrease since the week ended June 10th. According to the U.S. corporate news, Intel shares climbed 3%, or $1.11, to $37.67 following the renewal of their outlook for the third consecutive quarter. Oracle Company went down 4.7 per cent, or 1.94, to 38.92 after they indicated towards the end of last week that growing sales in its cloud computing company were settled by a plunge in its software-licensing sector in the last half.

In addition to the declining atmosphere, U.S. crude oil slipped its barrel prices to $43.03 each – this reflects a 6.2 per cent decline observed for the week. Another division that felt the hit was the S&P 500 energy sector which saw a 0.9% decline by Friday. The issue of oversupply has created a huge concern in the oil markets throughout the past few months.

The information from the U.S. Labour Market showing that consumer prices increased in August set the Wall Street Journal Dollar Index (it weighs the U.S. currency against sixteen others) rising 0.7 per cent on Friday.

With other factors considered, even when explaining the more-than-anticipated consumer prices, it can be concluded that the economic data for the U.S. has come way weaker than it was expected.

On Friday, data indicated that industrial output and retail sales went down last month. The consumer-prices report released on Friday is one of the last major considerations of economic data Federal Reserve officials will see before their meeting later on Wednesday and Thursday this week. There are a whole lot of speculations from investors and market analysts, but most expect of them hope central bank will retain the short-term interest rates.

Investors and market analysts tend to appreciate a creation and an explanation of a big-picture plan than a rate increase. This is because, the trend and the continuity in the market plays a big role in their investments. Japan’s Nikkei Stock Average went up 0.7 per cent at the end of last week but declined 2.6 per cent for the week. Markets in Taiwan, China, South Korea, Malaysia, and Hong Kong were closed for the mid-autumn celebrations.

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