A year of misery for markets

FOR those of you who felt that we had a rough year last year, your gut feelings have now been confirmed.

Datastream has released the graph (right) which shows what a miserable year it was in just about every market around the world.

The indices measured are the three Australian indices (the ASX 300, the All Industrials index and the Resources index), the Dow Jones index, NASDAQ, London’s FT 100, Japan’s Nikkei, Hong Kong’s Hang Seng and the Morgan Stanley Capital index representing a weighted average of each of the indices in the world.

As you can see, the NASDAQ had a wretched year right through the whole of the calendar year.

The nervousness displayed in America, both through their technology sector as well as the broader index of the Dow Jones, flowed through to us here.

In addition, there was uncertainty in Japan, London and Hong Kong.

It is almost fair to say that not a lot was spared anywhere in the world.

Despite these uncertainties, the banks in Australia continued to produce solid earnings growth in an environment where earnings remained under pressure. Resources in the Australian market outperformed the broader market.

This was largely due to the higher oil prices.

News Corporation was a major domestic influence.

When the stock represents so much of our broad index, any impact on that stock is likely to have an adverse impact on the market generally.

Profit warnings in the US seemed to overhang their market through the year.

Microsoft was an early influence causing profit downgrades to permeate throughout the entire technology sector resulting in a –32.76 per cent return for the NASDAQ for the December quarter.

The cut in interest rates by the Fed following the end of the calendar year has certainly stabilised the fall out that we saw before then.

European markets seem to have been influenced as well by the US.

Unfortunately, the influence was almost entirely negative. The FT100 index in England also had a poor year. When you examine the various markets around the world it was probably fair to say that 2000 was truly an “annus horribilis”.

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