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K. S. Badri Narayanan

THE markets across the globe opened on a weak note in April with the uncertainty over the span of US-led war on Iraq, on the one hand, and the deadly pneumonia virus — severe acute respiratory syndrome, or SARS — on the other.

However, the shorter-than-expected war brought some cheer, particularly to the US and the European markets, as the investors turned their attention to economic and corporate fundamentals.

US market: The confidence generated by a smooth end to the war seemed to have brushed aside even the poor manufacturing and jobs data. The Institute of Supply Management data showed that, for the first time since October 2002, US manufacturing contracted in March, and the US Department of Labour data showed that jobless claims outside farming also fell that month.

Further, the series of positive financial performance announcements from leading corporates bolstered the bullish sentiment. Alcoa, the world's biggest aluminium maker, posted a better-than-expected Q1 performance; its income from continuing operations in the first quarter was $195 million, or $0.23 per diluted share, compared to a loss from continuing operations of $125 million, or $0.15 per diluted share, the previous quarter.

Citigroup, the largest US financial group, reported an 18-per cent jump in its Q1 profits; Bank of America announced a jump of 11 per cent rise in its Q1 profits; JP Morgan Chase reported its best quarter performance. Good performances and positive guidance from infotech majors IBM, Intel and Microsoft lifted the sentiment further.

However, negative news from the likes of General Motors and Coca-Cola checked the smooth progress of the US market. GM issued a warning that it might not achieve its projected full year earnings guidance while Coca-Cola announced that its unit case sales dropped in such key markets as Japan and Germany.

The weak US GDP data of 1.6 per cent (annualised) for the quarter released during last week of April underpinned the sentiment.

Europe: It was one of the better months for European stocks, as they posted their sharpest gains in almost six years despite strong euro, which was at a four-year high against the US dollar. Volatile insurance and auto stocks, which were battered heavily in the first quarter, were able to reverse the downtrend.

Led by German insurance majors Munich Re and Allianz, and one of the country's leading banks, HVB, European stocks posted handsome gains.

Drug firms such a Britain's GlaxoSmithKline, Anglo-Swedish firm AstraZeneca, Franco-German Company Aventis and Danish pharma major Novo Nordisk also bolstered sentiment by posting better-than-expected financial performances. As a result, the Dow Jones Stoxx 50 Index registered its biggest monthly gain ever since calculations for the index began in 1987.

The Stoxx 600 Index has advanced 11 per cent. Both the indices are down less about 3 per cent for the year.

Asian stocks: Apart from SARS impact, equities across Asia suffered due to insipid financial performance from corporates. If it was such IT majors as Infosys, Wipro and Satyam for India, Sony accounted for Japan.

On SARS impact, the Singapore Straits Times index plunged below the September 2001 level, while Hong Kong's HangSeng dipped below the October 1998 levels.

Thanks to the US rally, most of the benchmarks witnessed recovery, except a few such as in India, Taiwan, Korea and Japan's Nikkei.

Broadly, April was good for equities.

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